Why you shouldn’t waste money on Google AdWords

I know this will sound crazy … but for most new entrepreneurs, I don’t think you should waste your precious time & money on developing a Google AdWords campaign. Here’s why:

Think about what people did before the internet… I mean, aside from not walking into inanimate objects because you’re staring down at some little screen. Somehow before the internet, businesses managed to grow & survive. Somehow entrepreneurs were able to unearth companies buried in the darkness of their ideas.

What strikes me about the modern startup “process” is how narrow it has become. Every path seems to lead to the same place: Paid content … advertisements … traffic metrics… conversion rates.

The problem is, it’s too easy, as an entrepreneur looking to validate your business idea, to fall into the trap of these metrics without first proving doing the sometimes uncomfortable work of developing a concept with a small group of potential customers, and then selling one or two on the idea before jumping feet-first into a full-blown paid content campaign.

The fact is, if you want to see if someone is interested in your product, you really need to go talk to people first. If the idea has merit, you should be able to find a paying customer through your existing networks. And a paying customer might not mean they are paying you the final asking price for your product. But you should be able to find someone who is willing to part with their money for the promise you are offering.

Most of us are not natural sales people. In fact, I would guess that most people don’t like selling at all. It’s why Google AdWords & Landing Pages are so attractive. They offer a way to feel like you’re selling something, without having to undertake the essential interaction at the root of every venture: talking to a potential customer.

To do this well means developing a good sales pitch, rehearsing it, failing at it, revising it … all the embarassing steps along the way toward crafting a solid message.

So, before you start spending tens or even hundreds of dollars on driving paid content to your site for a validation, you may want to consider picking up the phone, sharing your idea with people, and then asking them “Would you like to try it for $XX”

That is the first step.

If you don’t feel comfortable having these kinds of interactions, Venture Verify can help you… from building a landing page to lead generation and outbound sales. It’s what we do.

Lean Startup Essentials: Have a Hypothesis

If you are going to A/B test your landing page .. with VentureVerify or not … it’s important to know where to start. With all the tools available for an entrepreneur these days, it is easy to begin testing a website without giving much thought to what a successful test looks like.

The goal of testing is to learn … but learning requires comparing an expected outcome to the actual results. Without that expected outcome, it can be easy to fall into the trap of vanity metrics. Just because numbers go up after posting some content, it doesn’t mean much unless you keep track of what works & what doesn’t.

That is, measure & verify … and to measure you need a hypothesis.

Though it doesn’t provide as much sense of accomplishment as sending a live URL to a friend showing your landing page; spending the time to think-through how you plan on measuring success will do more for your business in the long-term.

It’s a key investment of your time. It’s where you apply your differentiation.

So what do you do?

If possible, try to put things in terms of numbers. And when you first launch a website, it can be hard to articulate what conversion rates you should be getting, or how you should improve. But the best thing to do in this case is just make an educated guess.

In that case I’d ask myself, “How many conversions do I realistically expect given the people who are going to be conducting the test?  How many conversions would be amazing? What is the bare minimum I should expect if we were just average?

These kinds of questions can be answered with a numeric guess. Like, “I think I can get 2% conversion, and would be amazed if we got 10%.”

So then what is the actual measurement you want to take?

For this new landing page, you want to have something replicable. So try to put things in terms like “Repeatable average” number of conversions. So, I’d say I want “between 2% and 10% repeatable average conversions per channel, in order to determine which one is best.”

Now you have a hypothesis you can measure.

A better test is then to estimate how much you would spend per channel, so your test budget can be most useful. More on that later.

The problem with The Lean StartUp

Let me begin by saying I really like the Lean StartUp method described by Eric Ries. It’s a great blueprint for entrepreneurs who have been thinking about launching their new business idea. It speaks to one of the big challenge for any small business: how to lower the chance of spending money on a bad idea.

There are a ton of great resources available for people who want to work from home or A/B test a landing page to see if people will buy your product or service.

The problem is: organizing all these resources and making the most of them is not easy.

I have several friends who own or manage a startup business, and even with a team working for them, trying to organize all the accounts effectively is a full time job. Every idea requires setting up several accounts and then tying them together, just to test one concept.

For example, even a simple MVP often requires setting up a dedicated email, buying a domain name, tying that domain name to your A/B test platform, identifying market trends using Google AdWords, generating content to drive traffic, and then providing some mechanism to accept payment.

Each one of these steps can take a few hours, depending on your level of familiarity.

To learn it all from scratch is the big challenge. For most people, it takes a year or more of trial & error to become proficient in the use of some of the more advanced tools, like Google Analytics, AdWords, Twitter, HootSuite, GoDaddy, MailChimp, and WordPress.

The important component of all of these being: How do I interpret the results?

The critical measure of success is whether an average person can interpret what they have developed effectively. And to do this, it takes more than just using The Lean StartUp book as a guide.

And what isn’t included in the book is what to do with your idea once you’ve validated it. Things like how to get a Small Business Loan, how to find a good Software Developer to build what you’ve validated, and where to pitch your idea to an Angel Investor.

Again, I think The Lean StartUp is great. But I think it most entrepreneurs who want to test and build their good idea need more than just a guide. They need a team to help them build these tools, measure the results, and then provide support to find the right resources if the idea looks like a winner.