How To Run Google Ads for Freemium Clients

How To Run Google Ads for FreemiTitleum Clients

My paid marketing career has had a strong B2B focus and, within the subset of B2B clients, I have worked extensively with Freemium Business Models. While the basics of lead generation B2B paid marketing will apply here, there are some unique and interesting considerations that paid search managers need to be aware of to maximize the success of the campaigns.

Paid Latency

In my experience, 85+% of B2B free conversions happen within 24 hours of the first visit to the site. Also, an exceedingly small percentage of people bypass the free conversion entirely and go “Direct to Paid.” Everyone else signs up for free and “kick the tires” for a while to see if the free version works for them, if they wish to upgrade to Paid to get “full” functionality, or if they want to stop using the product altogether.

Where Is Paid Latency Found?

In the Tools & Settings Menu of Google Ads, click on “Attribution” and then, on the left margin, click “Path Metrics.” I would set the Lookback Window to 90 days (and hopefully, you have at least 90 days of accurate conversion data). Then, check to see what the Paid Conversion Latency is for your account. In my experience, 30-45 days is a common average (even if the Free Conversion Latency is only 1-3 days).

Tactics to Optimize for Paid Conversions for the Freemium Model

1) Upsell Retargeting. It is important to keep free users focused on the value of upgrading. If they are using the product, they are likely getting different types of cues to upgrade. You are likely messaging them in product, and they are also likely bumping up against the ceilings of their free account as they perform unique and diverse tasks within the product. However, my experience tells me that that’s not nearly enough of an upgrade push. I like to map out the various content assets on the website and figure out which pieces have some tangential relevance to the upsell decision. I would then add these assets, along with a relevant responsive display ad that speaks to the value of remarketing, to a campaign that targets the free user audience. The objective is for each visitor to see a random cycle of these content ads daily for at least 90 days (for it is likely that if they do not upsell during that period, they will not buy). If you have relevant 30 second or less video ads, I would also add them to the responsive display ads and also do upsell retargeting campaigns on YouTube (though I’d push the bulk of my retargeting budget into GDN). This tactic should generate a voluminous number of view-thru conversions (people who saw the ad but didn’t click on it and then converted later). If you examine Google Analytics, you are likely to see plenty of assisted conversions from this tactic.

2) Adding “Mid-Funnel” Conversions. Your free users are going to be a diverse group. There will be all kinds of reasons – demographic, firmographic, geographic, and others – that some free users will be much more valuable monetarily to the business than others. Within the product, the more valuable users might take actions (such as ones that hit up against the various freemium limit caps) that are also indicative of future upsell activity. Take one or more of these actions and pass that activity back to Google Ads so that Google’s algorithm can learn what types of users will be more likely to get further down the funnel (if not all the way to paid conversions).

3) Optimizing Towards These Mid-Funnel Conversions. Early in 2019, Google introduced “Selective Optimization” which, at the Campaign Level, allowed optimization towards any listed conversion type (or combination of conversion types) in the account. Previously, all Google accounts needed to optimize towards only one conversion type, which was a huge disadvantage for Freemium companies for they had to choose whether to optimize for the free conversion or the paid conversion. Now, they can choose to optimize towards either, both (with paid conversions given much greater weight), or any mid-funnel milestone that your data shows is a precursor to a prospect being more likely to convert to paid. What I’ve seen with many clients is that there might not be enough paid volume to optimize purely for paid and that the volume and that optimize towards free conversions doesn’t allow the business to isolate and promote the free users who have the characteristics of paid users. The introduction of a mid-funnel “milestone” conversion allows the ability to optimize partially down-funnel while giving the business a conversion type with sufficient volume for optimization purposes.

4) How To Choose a Freemium Mid-Funnel Conversion for Selective Optimization. Freemium models that have a limit of some sort have an easy choice here. The action of hitting that free limit should be a mid-funnel conversion choice, for these people will be much more likely to convert to paid (they will need to if they wish to go beyond the freemium ceiling). An audience created from this mid-funnel conversion type will be incredibly effective for prospecting purposes. Another idea that we are implementing with a current agency client is to segment out business email addresses from personal email addresses. Data shows that prospects with business email addresses are not only much more likely to convert but will convert at a much higher LTV. By making this segmentation immediately after the free conversion occurs and then passing back the business-email-only audience back into Google Ads for targeting purposes, our client can immediately spend their dollars targeting a much higher ROAS audience.

5) Attribution of LTV Throughout the Funnel. Ideally, a B2B business that’s generated a solid volume of sales has figured out what the lifetime value (LTV) is for each type of sale generated (which also might be further segmented by geography or other factors). Once the paid conversion occurs, the LTV value should then be pushed back into Google Ads for optimization purposes. However, it is generally suboptimal for B2B to attribute 100% of the LTV value back to the paid conversion type, because such a tactic tends to shrink the funnel size and discourages funnel diversity that ultimately leads to a larger number of future sales. Instead, LTV should be proportionally attributed to each conversion type in the funnel. A rule of thumb that I have used is that the “free conversion” generates 10% of total LTV for Google to optimize towards. A “mid-funnel conversion” could get 30% of the total LTV, leaving 60% of the LTV for the actual paid conversion. Note that these percentages are subject to change and should be based upon your actual free/id-funnel/aid conversion rates. They also can be tweaked as an optimization technique. Do not confuse these LTV numbers with actual revenue…the LTV is just an artificial construct based upon the sales reality that is used proportionally to generate an optimum number of targeted paid leads for paid marketing purposes. Moving a portion of the LTV up-funnel widens the top of the funnel in such a manner so that more people convert to Paid in a manner that generates more revenue and profit than just targeting paid conversions.

In closing, Google’s paid marketing has evolved greatly over the last 18 months for B2B marketers. With some foresight and some assists from your CRM/back-end data system, you can optimize your paid marketing efforts so that you’ll get more qualified people into your paid sales funnel and ultimately close a higher volume of them.

Todd Mintz

September 16, 2020

By Todd Mintz