PPC Spend Relative to Startup Size

This week I had the opportunity to talk with two different startups generating eight figures of recurring revenue and spending seven figures of it on pay per click (PPC) advertising. I knew the companies were a good size, but had no idea how important Google and the direct response online advertising model was to their business. Think about it — spending more than $1 million per year on ads to generate leads for a small business (both under 100 employees). That level of spend shows the power of PPC as well as how a finely tuned sales and marketing machine knows the different levers required to profitably acquire customers (both startups are bootstrapped).

A few thoughts on PPC spend relative to startup size:

• When you think about getting into a market, do research on the keyword search volume and costs to be competitive using the Google tools
• Some startups look like they have a fairly easy product to build but are in reality amazing at customer acquisition, which is harder than building a great product in many cases
• Generating traffic through inbound marketing with blogs, social media, and other methods can be one of the most powerful ways to grow a business, but are often not as predictable as other methods like PPC and sponsorships

My recommendation is to spend serious time thinking about customer acquisition like you do thinking about the product. PPC is an easy, and expensive, way to drive serious traffic and deliver leads.

What else? What other things have you seen regarding startups and PPC spend?