Is Paid Search Killing Your Growth?

You want fast growth, and Paid Media (PPC) can offer just that. Your business can quickly climb to the top of search listings, capture demand, and attract thousands of customers within weeks. Sounds like a perfect Growth Strategy right!?

PPC delivers a jolt of attention, customers, and growth. However, similar to renting a house, once you stop paying, you're left with nothing to show for your investment. With more and more insights coming out of the anti-trust hearings in the US (including "thicker" auctions, my favourite phrase right now).

Your company needs growth to meet its goals, and you're likely considering funneling next year's budget straight into PPC. You might even push your agency to work harder, find new solutions, and scale results. But before you do, consider the risks. PPC can lead you into an endless spiral of diminishing returns. Read this article first, and then let's discuss better SaaS growth strategies that won’t leave you dependent on paid search.

Can You Scale Paid Media?

The short answer: Yes, but only to a point. The longer answer requires a deeper understanding of how paid search works.

Supply & Demand Determines the Auction Price

PPC operates on an auction model driven by supply and demand. The "supply" is the number of people searching for a given term. The "demand" is the number of companies bidding for those potential customers. If there’s a high supply (lots of people searching) and low demand (few companies bidding), you’re in a favorable situation—though that’s more typical of the early 2000s.

More commonly, there's either low supply and high demand or the keywords you’re bidding on are too low in volume to support sustainable growth.

You're Increasing Your Own Bid Price

In Google ad auctions, the real winner is Google. The more competition, the higher the auction price—and the more Google earns. For example, suppose you want to rank on the first page for "Best Growth Consultants in the World." You outbid the seven existing bidders to secure a top spot. However, competitors react by increasing their bids. Within weeks, you’re paying more for the same results.

This cycle often leads to escalating costs without a proportionate increase in returns.

What Happens When the Bids Go Up?

When bids increase, the auction price inflates as companies continuously outbid one another to capture demand. If PPC is your primary customer acquisition strategy, you'll need to keep raising your bids to maintain results. Depending on your Customer Lifetime Value (CLV) and payback period, you might find yourself priced out of the market. At this point, you're left with three options:

1. Increase your CLV.

2. Lower your growth expectations.

3. Accept losses on growth and hope it eventually works out.

Is Paid Search Any Use for Growth?

The short answer is yes, but with limitations. A sustainable growth strategy should involve a mix of earned and owned media. Paid search can play a role, but it should not be your primary growth channel—especially in the early stages. Relying solely on PPC can become addictive and unsustainable.

Google's evolving SERPs continue to affect the role of paid search. Even with more ad-friendly changes, companies focused on growth should strive to own as much of their marketing as possible (see "Own Your Own Shit").

Paid search can be particularly beneficial for e-commerce, especially within Google Shopping results, as the PLA algorithm differs. However, even here, PPC should be part of a diversified strategy.

Examples of Companies Over-Investing in PPC

Many companies have fallen into the PPC trap. Early-stage SaaS companies, in particular, often over-invest in paid search, hoping for quick wins. For example, the meal kit company Blue Apron spent heavily on PPC for rapid customer acquisition. While it initially boosted their growth, they struggled with profitability as their CAC (Customer Acquisition Cost) soared. Similarly, Homejoy, a home cleaning startup, relied on aggressive PPC spending, which led to unsustainable costs and contributed to its eventual shutdown.

I've seen this happen with my own clients. One in particular needed to hit aggressive pre-sale growth targets and spent a year heavily investing in PPC to achieve them. While this did drive a lot of customer acquisition, it also brought significant challenges:

- High-cost, support-heavy, first-time customers

- The need to expand the support team to manage these customers

- Cash flow issues within the first year

By focusing solely on paid search, they neglected other channels and lost valuable time they could have spent building organic growth. When the high costs of PPC caught up with them, they were left with no strong foundation in organic traffic or brand presence. Eventually, the company had to downsize, missed their growth targets and the sale, and had to start over. They were forced to adopt a multi-channel strategy to rebuild growth—a process that took even more time to implement effectively.

Conclusion

Paid search can be a valuable component of your growth strategy, but it's not a long-term solution on its own. PPC should complement a broader strategy that includes earned and owned media. Over-reliance on PPC leads to escalating costs, diminishing returns, and can limit your company's ability to scale sustainably. The focus should be on building a growth strategy that isn't vulnerable to fluctuating auction prices and diminishing returns.