Paid Social Is a Terrible Investment for B2B

0:00Paid social is a terrible investment for B2B. Now, I know I'm saying something outrageous, but if we take a look at my screen over here, this is from a friend of mine. His name is Chris Walker. He's got an agency that does really well. And basically, you can see from this post as it's pulling up, it says, Confirm with data. Paid social lead gen on Facebook and LinkedIn is terribly inefficient and provides very low ROI. So he's been saying this for over six years, but now this is confirmed with a massive data set released by Metadata. And I don't know if you know this, Neil, but Metadata, they're actually going to be at the upcoming event in Beverly Hills.

0:32So we can pull some information from this guy. But here, I'll let you read this off what I just highlighted just so you have some meat on the bone. Dude, I cannot read that. It's too tiny for my screen. I will read it. All right. So here's what it says. This is absolutely groundbreaking data set for B2B companies, especially given the scale. $42 million in total advertising spend, 236 ,000 total air quotes, quote unquote, leads collected. Okay. And all of the associated downstream data for pipeline and conversion rates. Here's the breakdown and my analysis of the data sets. So I'm not going to read everything here, but I'm going to read the top two things over here.

1:05So the first one says 90 % of advertising dollars were spent on lead gen campaigns. So 37 million of the 42 million total spend. And so that's the first part. The second part is download was the most popular CTA indicating that B2B companies are still using paid social to drive downloads of gated PDFs. Average cost was$126 to get someone to maybe open the PDF. And then it said number three, I'll go to number three. I want to get some takeaways here. Okay, number five, estimated advertising CAC, so cost of acquiring a customer payback period, it's estimated to be 21 months. So$38 million in total advertising spend on lead gen campaigns, resulting in$22 million in closed one revenue.

1:43Yep. So what I've seen with B2B, I wouldn't say it doesn't work with social ads. In most cases, I haven't seen it work. I've seen it work mainly for brand awareness. So if you have something that's very targeted to let's say CMOs and you have a great data set and you're just targeting them, it helps get the brand across. And then I've seen it make it easier to get invited to RFPs, close deals with them, build trust, et cetera. But at mass scale, we haven't seen paid social ads be too effective for most B2B businesses, but that doesn't mean it doesn't work. We still do a lot of paid social ads with B2B businesses and we are getting results for some of them.

2:27The ones we don't, we cut it off and we focus on things like Google ads, but we are seeing it work in some cases and we are seeing it not work in other cases. And we spent much more than$42 million on it. We probably spend more than$42 million a month on B2B social ads. Here, I'm going to read number three over here. So based on the data, I estimate the lead to win percentage to be 0.3%. That means sales needs 333 quote unquote leads to win one deal, which is terribly inefficient. This is consistent with what I see with my own analyses. Average lead to win rate I see is somewhere between 0.1 % and 0.2%, meaning you need 500 to 1 ,000 paid social leads to win a deal.

3:05Now, look, even though we're reading this data set to you, it doesn't mean that you shouldn't be testing it at the end of the day, right? Because I've seen success with it. Same deal with Neil as well, right? I think it's your mileage may vary. And I think the key thing to call out here from my perspective is that we're seeing a lot of people run the same Me Too ads. A lot of marketers, they do checklist marketing. They do Me Too. And I'm not talking about the other Me Too market. I'm just saying like everyone's just copying each other, right? At the end of the day. And so if you're going to do that, that means the efficiency of your ads and how well they stick out and how well they hook people, they're not going to work that well, right?

3:39And people don't have time to download something and then read something at the end of the day. That's fairly dated. You got to think about how you can hook people quickly because people's attention spans are getting shorter and shorter. Yeah. So look, I think you can test out social ads for B2B. You shouldn't not just do it based on those stats. Again, we've seen it work for many companies. It all depends. We actually see it working better for companies that are selling something super expensive. So if you're selling something for a million dollars or$500 ,000, we find it to work much better than when you're selling something for a thousand or 5 ,000 or$10 ,000.

4:16But like I mentioned earlier, I'm like 99.9 % sure that we spend way more on B2B social ads a month and And we're producing ROI. Doesn't work for all businesses, but you can find out pretty quickly. You just got to get pretty creative with the tactics and strategies. We've also found the method that works really well is brand awareness, targeting specific people with data. And then you do account-based marketing. Your sales team reach out to those people and try to sell them. And we found that strategies to work quite well. Let me read this last part over here. So low cost per lead does not indicate actual success.

4:52So the average cost per lead was$172 across all lead gen campaigns. But given the very, very, very low win rate of these leads, we estimate advertising CAC to be$57 ,000 to win one deal, which is consistent with what Neil's saying about, again, if you're like a Microsoft or you're like an enterprise company like Amazon or whatever, like selling AWS, your contracts are a couple hundred thousand dollars, if not into the seven, eight figure ranges maybe. And so it is worth it to pay the$57 ,000 to win one deal. It's just pretty cost prohibitive for a lot of businesses. So you just got to know your numbers at the end of the day.

5:24And that's what it comes down to. And then test. Obviously, we've talked about a lot on this podcast that the X factor to winning now when it comes to ads is one, you're creative. And then two, really looking hard at your data. And we're going to do an upcoming episode on how, I don't tell you this, Neil, but I was looking at our YouTube analytics yesterday. I just wanted to throw my monitor out the window. So you just got to look at your data sometimes. So that is it for today. Please don't forget to rate, resubscribe to this pod. It helps us grow. And we'll catch you later.