top | item 37700847

Burning money on paid ads for a dev tool – what we've learned

679 points| fmerian | 2 years ago |posthog.com | reply

273 comments

order
[+] hannofcart|2 years ago|reply
The article has some helpful points. But as a programmer-SAAS-founder-who-took-over-ads operation, I have some tips on some insights we gleaned doing paid ads (and getting it to be profitable for us):

1. Most important tip: is your product ready for ads?

  - Do not do paid ads too early.

  - Do it once you know that your product is compelling to your target audience.

  - Ads are likely an expensive way of putting your product in front of an audience.

    - No matter how good the ad operation, unless your product can convince a user to stay and explore it further, you've just gifted money to Google/X/Meta whoever.

  - If you haven't already, sometimes when you think you want ads, what you more likely and more urgently need is better SEO optimization
2. The quality of your ad is important, but your on-boarding flows are way more important still.

  - Most of the time, when we debugged why an ad wasn't showing conversions, rather than anything inherent to the ad, we found that it was the flows the user encountered _AFTER_ landing on the platform that made the performance suffer.

  - In some cases, it's quite trivial: eg. one of our ads were performing poorly because the conversion criterion was a user login. And the login button ended up _slightly_ below the first 'fold' or view that a user saw. That tiny scroll we took for granted killed performance.
3. As a founder, learn the basics

  - This is not rocket science, no matter how complex an agency/ad expert may make it look.

  - There are some basic jargon that will be thrown around ('Target CPA', 'CPC', 'CTR', 'Impression share'); don't be intimidated

   - Take the time to dig into the details

   - They are not complicated and are worth your time especially as an early stage startup

  - Don't assume that your 'Ad expert' or 'Ad agency' has 'got this'.

    - At least early on, monitor the vital stats closely on weekly reviews

  - Ad agencies especially struggle with understanding nuances of your business. So make sure to help them in early days.
4. Targeting Awareness/Consideration/Conversion

  - Here I have to politely disagree with the article

  - Focus on conversion keywords exclusively to begin with!

  - These will give you low volume traffic, but the quality will likely be much higher

  - Conversion keywords are also a great way to lock down the basics of your ad operation before blowing money on broad match 'awareness' keywords

  - Most importantly, unless your competition is play dirty and advertising on your branded keywords, don't do it.

    - Do NOT advertise on your own branded keywords, at least to begin with.

    - Most of the audience that used your brand keywords to get to your site are essentially just repeat users using your ad as the quickest navigation link. Yikes!
5. Plug the leaks, set tight spend limits

  - You'll find that while your running ads, you are in a somewhat adversarial dance with the ads platform

  - Some caveats (also mentioned in the article)

    - Ad reps (mostly) give poor advice, sometimes on borderline bad faith. We quickly learnt to disregard most of what they say. (But be polite, they're trying to make a living and they don't work for you.)

    - (Also mentioned in the article) Do not accept any 'auto optimization' options from the ads platform. They mostly don't work.

  - Set tight limits on spends for EVERYTHING in the beginning. I cannot emphasize this enough. Start small and slowly and incrementally crank up numbers, whether it be spend limits per ad group, target CPA values, CPC values - whatever. Patience is a big virtue here

    - If you're running display ads, there are many more leaks to be plugged: disallow apps if you can (article mentions why), and disallow scammy sites that place ads strategically to get stray clicks.

    - For display ads, controlling 'placement' also helps a lot
6. Read up `r/PPC` on Reddit

  - Especially the old, well rated posts here. 

  - They're a gold mine of war stories from other people who got burnt doing PPC, whose mistakes you can avoid.
[+] dale_glass|2 years ago|reply
> This is why we ask all users where they heard about PostHog whenever they sign up or book a demo – it's a simple (optional) free text field. Enough of our users say 'ad on Google' or similar that we know paid ads do actually reach a large chunk of them.

You have to be careful with how you word questions.

If you ask how I first noticed that something exists, then yes, an ad may well be it because ads are so in your face and hard to avoid. But it almost never is what convinces me to try the thing. In some cases ads actually dissuade me from trying the thing.

For instance, I'm extremely allergic to the word "proprietary". If that's your selling point, then you automatically fall way down in my list. I like my software boring and useful for my ends, not to be locked into somebody else's system.

Pretty much always what does it for me in the end is positive discussion in technical spaces.

[+] Lutger|2 years ago|reply
I believe ads work by making a brand name familiar, which helps you recognize it in the sea of information. And that makes it automatically somewhat more attractive and reputably. You can be entirely unaware of this and it still works.

Maybe the ad is not what convinced you, not at all, but it did prompt you to wonder if this LaunchDarkly thing is any good. Youtube kept spamming it in your face and you kept ignoring it, but of course the name stuck and now there are talking about it on HN so you decide to read "that" thread and not the other one about unleash or something you never heard of.

[+] sfink|2 years ago|reply
Aren't you mostly talking about what the article calls awareness vs conversion? You're saying that ads made you aware and technical discussion is what would make you convert.

The other thing is controversial. "There's no such thing as bad PR" is a saying for a reason. I am also convinced that there are some things that make me never, ever consider a product. And yet: there was this one brand I hated, but it's been a while, and this one looks familiar... was it the good one or the bad one? Never mind, I don't have time to try to dredge that up, this looks familiar at least so I'll just grab it and remember for next time. (Sure I will...)

And that's just one way that bad PR can still be effective. Another is that it gets people talking about you, and some people will argue the other side because the main person's arguments are just bad.

Bad PR is good for awareness. Conversion is often based on different criteria than you expect. You may hate X, but you have a client who has heard of X and hasn't heard of Y, your preferred option.

[+] AussieWog93|2 years ago|reply
>If you ask how I first noticed that something exists, then yes, an ad may well be it because ads are so in your face and hard to avoid. But it almost never is what convinces me to try the thing. In some cases ads actually dissuade me from trying the thing.

In my primary business (used video games) I've found that the #1 way to get sales is:

- Give the consumer every feature they need (ideally communicate this in a picture)

- Be the first search result

It's not about detailed descriptions, super-competitive prices or superior product quality.

People will literally just throw money at the first product they see that ticks all the boxes.

In the SaaS world, where everything has a free trial, I can imagine this "rule" is even more true.

[+] yunohn|2 years ago|reply
> If you ask how I first noticed that something exists, then yes, an ad

Yes, that’s the point of a “branding” ad campaign - to drive upper funnel interest in a company/product.

They can also use retargeting to show the same people “performance” ad campaigns, which are meant to drive a lower funnel conversion like a signup, purchase, or even a demo.

Depending on the product, you can even use an organic discussion about your product as marketing material to get people to see the interest others have in it. Or market a conference or dev day where they show off its capabilities.

There’s a lot of layers to marketing, it’s not as simple as HN makes it out to be.

[+] SOLAR_FIELDS|2 years ago|reply
Yeah, I agree about positive discussion in technical space. Even if it’s just the founder coming on a Reddit thread and shilling their own stuff while still providing value by comparing it to other products.

Example: I was interested in looking more into Dremio the other day but couldn’t really find any good positive technical discussion about it on HN or Reddit so I just… stopped looking into Dremio

[+] Retr0id|2 years ago|reply
Even negative discussion can be a positive signal sometimes, e.g. if it's someone complaining about the rough edges that they still use a product in spite of - because it still ultimately solves their problems.
[+] kromem|2 years ago|reply
Paths to conversion are typically rather complex and have multiple touch points.

Awareness is a big deal and a necessary step before it's possible to even be in a consideration set.

For example, TV ads typically rank very low in any self-reported market research on influencing purchase intent.

And yet if you run a test in a DMA pulling TV ads you'll see sales decrease dramatically.

While the industry likes to pretend it has come a long way, in many cases marketing and advertising is still just as much "I know half of my ads work and half don't, I just don't know which half is which."

[+] kouru225|2 years ago|reply
Wouldn’t that still be a beneficial thing? It’s like how I don’t need a plumber but if I did need a plumber I’d go reach for the last one I remember.
[+] YetAnotherNick|2 years ago|reply
Could you list down some non popular digital service you pay for(i.e. not google workspace, AWS etc.) and how you heard about it?
[+] swyx|2 years ago|reply
also check if it's just alphabetically sorted - "a" comes before the other options, and people being lazy just pick that
[+] n_ary|2 years ago|reply
> we ask all users where they heard about PostHog whenever they sign up or book a demo – it's a simple (optional) free text field. Enough of our users say 'ad on Google' or similar that we know paid ads do actually reach a large chunk of them.

Caveat: I always type in "search engine" or "google" despite the fact that I only use Brave/Bing/DDG. I often find things on random interesting post where the author remarks some benefits that I think applies to me and go checkout those products.

When I see such boxes "where did you hear about our product" I just type in "google" or "search engine" because I don't exactly have the time to go back through 100 tabs I have open and find the exact one article where I found the product and copy-pasta the url.

Nearly all of my colleagues also do this, because it is easier to type "google", so advice is to take these boxes with a grain of salt. A better metrics could be the referrer field on your site logs.

[+] wantsanagent|2 years ago|reply
I was surprised youtube channel sponsorships didn't make this list, at least for consideration. I have multiple specialized adblockers installed (as I'm sure many here do) and so the only ads I encounter are baked into content I'm otherwise interested in. Currently vpn products and tutorial sites dominate these channels and so I'd almost welcome something else.
[+] oldtownroad|2 years ago|reply
Broad appeal to a casual technical audience is why you see the same type of sponsorships. VPNs are very high margin and easy to convert. You’ll see the same in across other types of content, e.g: recipe boxes (Hello Fresh) are very common for lifestyle channels, grooming (Manscaped) is very common for male audience channels and language learning apps are very common in educational circles.

A platform like PostHog would struggle to find the right audience on YouTube because it’s such a niche product.

[+] weinzierl|2 years ago|reply
I'm the same and I think it's more like a vpn product, a tutorial site and a certain website builder, where we all know which specific companies I mean.
[+] gbillig|2 years ago|reply
Check out SponsorBlock for skipping YouTube ads that are baked into the video
[+] swores|2 years ago|reply
Disclaimer: I run a small European marketing agency (though our minimum monthly budget for clients is a few times bigger than discussed & recommended in the article).

I think this is a really good article, and I definitely agree both with the suggestion to use an agency (though I suppose I could be biased here!) - there's a lot of low-hanging fruit and it's definitely possible to do plenty yourself, but unless you really can't afford an agency there's surely more important things to work on yourselves. While hiring dedicated marketing people makes sense when you're a certain size or bigger I've still seen the best arrangement to be as few people internally as possible and being people who are not only good at marketing but more importantly good at managing, and have the bulk of the work handled by an agency. Rather than having to deal in giving whole people specific jobs, an agency can provide small amounts of time as needed from a wide range of experts on different aspects.

I also agree that it's a good idea to be familiar with with it all too, though, because that way you can actually judge which agencies are worth working with and you can actually work with them, rather than leave them alone and hope they're going to do a good job.

This article itself is a really great example of what they explained at the beginning - about writing. It's not a paid ad, but it got me interested in potentially using their analytics product from having previously not heard of them.

[+] conductr|2 years ago|reply
> This article itself is a really great example of what they explained at the beginning - about writing. It's not a paid ad, but it got me interested in potentially using their analytics product from having previously not heard of them.

FWIW This article reminds me of the regular content on the HN front page 10+ years ago, the stuff that a lot of well known saas wrote to gain traction

[+] simonsarris|2 years ago|reply
Have spent six figures yearly on ads, mostly for reach for the developer-focused diagram library GoJS (https://gojs.net)

> Each experiment will need ~$500 and 2 weeks

I would add a zero if you want serious data. I would also double the timescale. $5,000 over 4 weeks

I second the uselessness of Google Display, it might look like conversions numbers are good but they are 100% too good to be true. As soon as you look into them you find the sources are things like "ad from HappyFunBabyTime Android app". You have to ruthlessly prune daily for months to get anything real, and even then I'm skeptical of value. For a developer tool with very strict conversion metrics!

But I disagree on Google Search:

> Good for conversion, bad for awareness.

Before we were popular it was excellent for awareness. Post popularity its much more arguable.

[+] cm2012|2 years ago|reply
I've spent about $100m on B2B ads in the last 12 years, including to developers. Overall the article is not bad but it's missing some things:

1) "LinkedIn Good for awareness, bad for conversion." LI can smash it on conversion. Its expensive so you need a high customer lifetime value. Make a compelling offer and try conversation ads.

2) Facebook/IG also does work for targeting developers, better than anything else but LI and Search. It's funny because there's such loud anti-facebook developers out there, but plenty use it anyway.

[+] joshstrange|2 years ago|reply
Quora being a good option is incredibly surprising to me. I never click on Quora links as 90% of the time the "answers" are just ads or people who want to pretend they are a bigger deal than they are and know more than they do.

I'm a little surprised podcast ads weren't tried, mostly because I'd love to know how well those do/don't work out for a tool like this.

[+] jdwyah|2 years ago|reply
Also marketing to developers, I've had the most success and enjoyed Reddit the most so far. It feels the most honest. Want to tell a bunch of rails developers about your dynamic logging? You can try to write a useful post that also mentions your product onto r/rubyonrails/ but you're run the risk of being downvoted into oblivion with "venordz spam suxxxx".

But it's fair game to promote the same post on that subreddit, because that's what promotion is supposed to do.

That said, you can't just post crap ads or you'll get snarky comments. As my co-founder said "You can’t just shout nonsense into the void without some accountability." I think the internet could use more of that.

(unpaid advert: we're also happily using posthog to track all of this. kudos to them for a great product.)

[+] Ylpertnodi|2 years ago|reply
>That said, you can't just post crap ads or you'll get snarky comments.

Ah, maybe you meant "honest" comments.

[+] somedude895|2 years ago|reply
> Awareness-based ads are a small part of creating demand. This takes more effort to measure, but is totally possible - see below.

Below where? What a tease.

Cpms? Amount of impressions? Reach? What about viewability? Brand lift studies won't be possible at these budgets either.

Do they mean just asking people where they heard about them?

[+] bongobingo1|2 years ago|reply
> Quora

>

> Dark horse – good for conversion and awareness.

> Quite cheap, good targeting.

> Seriously, I don't know why more people don't use Quora.

Amazed to hear that. All my homies hate Quora, I would assume its the same amongst other developer groups.

[+] glitchalumni|2 years ago|reply
I was quite convinced that Quora only consists of SEO spam nowadays - kind of a surprise reading that there are real people using it.
[+] diarrhea|2 years ago|reply
To this day I’m still confused about where questions and answers start and stop, respectively.
[+] klempner|2 years ago|reply
The flip side here: the ads I get on Quora are just terrible -- about 1/3 of it is some "stud briefs" underwear and about 1/3 is promoted CCP propaganda.

These are the ads of "they can't come up with enough ads to show me because not enough people are advertising on this platform".

[+] shantnutiwari|2 years ago|reply
> All my homies hate Quora, I would assume its the same amongst other developer groups.

Maybe they are talking about the old Quora-- the one from 4-5 years ago?

[+] mhh__|2 years ago|reply
Quora used to be amazing...
[+] throwawysn38|2 years ago|reply
> Seriously, I don't know why more people don't use Quora.*

It's a horrible website full of horrible answers. the UI is terrible and you often end up reading stuff that has nothing to do with the original question you were looking for. I think it's understandable that advertisers would avoid it based in their personal experience.

Quora was supposed to be the TED of QA. Well, not even TED is the TED of TED anymore so...

[+] benjaminwootton|2 years ago|reply
I’ve had my own startups and worked with tens of others. I don’t know anybody who has had good experience or ROI with paid ads.

There is something “emperors new clothes” about the whole industry where we all play the game but nobody admits they just aren’t very good. Yet we all keep paying the Google bills thinking it’s something you have to do.

[+] anonzzzies|2 years ago|reply
What is 'not really good'? We had spectacular ROI on adwords ads. BUT, and the article mentions this somewhat, not for tech/freemium saas products. Developers avoid ads like the plague. For consumer stuff that are just immediately paid (there is no free; you pay or you leave the landing page) it works incredibly well in our experience.
[+] jklinger410|2 years ago|reply
> I’ve had my own startups and worked with tens of others. I don’t know anybody who has had good experience or ROI with paid ads.

And how many of those startups had a great product market fit and were successful, without a ton of incumbents in the industry eating their lunch?

How much budget did they have and how much of their runway did it eat up to try and run ads?

Many people blame ads for simply having a bad product that no one cares about and never finding the right audience for that product for them to even serve ads to in the first place.

[+] ilrwbwrkhv|2 years ago|reply
I'll share a small secret. I don't know how replicable this is but I'm curious. Ad sets work really well for a while and then the numbers start getting faker and faker. So what I do is duplicate sets and everyday pause one and start another. This has given me better numbers although never 100% reliable numbers. All ad platforms fake some data and charge you for it.
[+] _xivi|2 years ago|reply
> we all play the game but nobody admits they just aren’t very good

I don't think that's common. Do you mean like in big corp where they use their deep pockets to make sure they don't leave room for competition?

In other cases, people just expirement in order to find the right channel, similar to this post, which ultimately depends on the objective and target audience. Then they focus their efforts there.

[+] hermitcrab|2 years ago|reply
I started using Google Ads in the early days and could get loads of well targetted clicks for £0.05 to £0.10 each. Those days are over. The "law of shitty clickthrus" says that every advertising channel gets less profitable over time.
[+] whimsicalism|2 years ago|reply
I see a comment like this on every discussion about ads for businesses, despite the fact that incrementality is easy to measure and quite good for a lot of businesses.
[+] danjc|2 years ago|reply
The house of Google always wins.
[+] mcbrienollie|2 years ago|reply
Day after day, the paid(online) ads is becoming traditional and all the startup owners or new entrepreneurs are diverting themselves into guerilla techniques. Buying Tiktok comments, ProductHunt reviews and more. Rather than spending the money on the algorithmic advertisement, they are trying to build a base where they can create a "base" for their possible customers. I really liked the article, and I think this is showing a couple of crucial signs about the topic I mentioned.
[+] kyle-rb|2 years ago|reply
> Twitter

> Turn off replies to ads (or have thick skin!)

Probably good advice in general, but most brand names don't need to worry about unwanted attention as much as "Post Hog".

[+] sakerbos|2 years ago|reply
Relying on an ad to convert a user is a big ask. Another approach could be to offer something high value to your target market in exchange for their email which you could then use to slowly raise awareness and convert users over a series of emails that offer even more value to them. That way you're greatly increasing the surface area of interactions with potential users while still genuinely helping them.
[+] rjakobsson|2 years ago|reply
PostHog is my favourite startup as of lately. Their company culture seems to really be pushing things to the next level. Very inspiring!
[+] vax425|2 years ago|reply
Thanks for sharing, mainly because I’ve felt like an idiot for utterly failing at marketing my tool (https://HeadlampTest.com) online to developers & testers. I get great results talking 1:1 in person, but nothing else moves the needle.

You’ve articulated the struggle better than anyone, and that’s very comforting for me. I mean, how hard could it be? Answer: super hard!

I haven’t tried hiring an offshore agency, but now you’ve got me thinking about it.