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Date added: 10 January 2022

Update: 26 May 2024

Why Google Ads isn't recommended if you're in software development or digital marketing

Over the years I met with at least a dozen of CEOs working in a software development industry to discuss what can be done in order to increase the volume of leads they generate. To be honest, I always liked this market, but I lacked certain skills to be a software engineer myself. This is why I’m happy to work on such projects, but this is the same reason I almost never suggest software development companies to pursue paid search campaigns in Google Ads. 

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  1. Choosing a technology partner takes time
  2. What happens most of the time?
  3. Lots of clicks mean lots of costs...
  4. But lots of costs don't always mean lots of transactions...
  5. Lead nurturing strategy as a solution

Why? For the same reason I limit to a bare minimum paid search campaigns for my business. It’s just that for some industries paid search works miracles and for some it doesn’t. In my opinion, if you create software or run something we call a “software house” in these parts of the world, I will not let you spend your money on covering keywords you feel may bring you clients and let me explain why is that.

Choosing a technology partner takes time

You have to understand that when it comes to building a digital product, choosing a tech partner isn’t something you do after visiting a single website. If you decide to find a software development company by Googling it (and I repeat: “if”), you want to compare at least several businesses. 

What happens most of the time?

A software development company CEO comes to me and asks for a paid Google search campaign covering keywords like “ecommerce software development in New York” or “flutter app development company”. If I agreed, they would pay 20-30-50 USD per click… and they would just generate clicks. 

Because, just like creating software, picking a tech partner is a process. There’s a lot of money involved in the project, it will take some time to build a product and there are a lot of things that can go wrong. Your client needs to make sure that you’re the perfect match. 

Lots of clicks mean lots of costs...

So you pay for these placements in SERPs and your potential clients click on your ad, click on the ad below, the next one and the one below that. At this point there are at least 4 tabs active in the browser and the research starts. If you ask me whether it’s possible to generate lead at this stage, I’d say yes. If you ask me whether it’s possible to close a deal from a lead generated this way, I’d say yes, but very little. So little I wouldn’t bet any money on it. 

Why? I shouldn’t generalize, but I will and I will only speak about my personal experience. People who search for a software development company by typing “the best software development company in London” often aren’t ready to buy yet. They’re at the very beginning of the sales funnel. They just want to find out what they should look for in their process of recruiting an agency and whether you are potentially a fit. 

You can pay for this traffic, but do you really want to? On the other hand, if you offer body leasing services - you could close a sale with such keywords. 

And what if this person who typed “React Native development agency” is under a lot of pressure and needs to start building the product immediately? Well, then we race. If your lead nurturing strategy isn’t optimized enough and it takes some time for your team to respond to emails, then you lose. Still, this person had several websites active in those 4 other tabs and it took you too long to reply, so you didn’t close the deal, because this person didn’t want to work with you. This person was looking for someone to work with them. That’s a huge difference.

But lots of costs don't always mean lots of transactions...

The other group is also interesting because I've always been told that your business or startup idea is worth exactly as much as a coffee in your local Starbucks. It’s because all of us have ideas for the greatest business of all time, but there’s a difference between having an idea and making it come to life. Many startupers are worried about sharing their ideas with VCs, potential partners or even friends, because someone could steal it. I tell you what: if all it takes for your business to fail is to tell someone what it is, I don’t have good news for you. 

But there’s another approach. Some people may have an idea, but don’t have the skills to create a product. And that’s fine. The problem is that some people also don’t have any funding to make someone create it for them.

If I had to count how many times software development leads asked for a team of developers in exchange for shares in the business, I would have lost track years ago. Obviously these leads go straight to the gutter. It’s because if Mark Zuckerberg came to me when he started and offered shares in Facebook for some work I had to do for him, I would have accepted it knowing what Facebook will become in the future. But most startups aren’t Facebook. Most startups fail and if I have to pay for a team of experienced developers work for a few months, I don’t want to hope that your business will blossom. I want to have money in the bank for services I provided. 

And software development companies pay for clicks in Google and get offers to get paid in shares from startups that often don’t even exist yet. 

It’s not their fault, it’s because there are different people looking for software companies in Google and you should be aware of the fact that not everyone who types “ruby on rails software development company in Ohio” has resources to pay for your work.

Lead nurturing strategy as a solution

And don’t get me wrong, I don’t say that Google Ads campaigns in search don’t work for software development companies. They do, but you have to understand a few things:

  • Don’t expect this source to be your main channel of clients acquisition. You’ll get expensive leads and a lot of them will be low-quality. 
  • If low price is your Unique Selling Point, don’t get your hopes up. It’s either covering expensive keywords and competing with players that have higher prices than you do and are able to pay more for a lead and still be profitable or covering less expensive keywords with smaller search volumes (and often lower purchase intent).
  • Conversion Rate from a lead to a paying customer is lower than you’d think and you’ll need a lot of leads to close a deal. It also takes a long time to close the deal so if you’re looking to scale up instantly - there are better sources to do that. Try Clutch instead, you’ll get higher ROI there.

Conclusion? Google Ads campaigns are great, but they aren’t equally great for all industries. Software development companies are difficult in terms of lead generation, because the sale process takes a long time, transaction value is very high and it’s hard to target people looking for a new website or an app on LinkedIn or Facebook, so paid search seems like a good way to go. But it’s not. At least not if you don’t utilize other sources and even then, I would suggest you running precise and high purchase intent campaign to increase the chance of the campaign to be profitable.

I’ve done it too many times to recommend you Google Ads campaign when you just started scaling up your software development business. There are better ways to spend your money.

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