Outbound prospecting as an alternative to spending a fortune on paid ads

We marketers know the struggle when there is a need to locate and re-locate budget and expenses for optimal ROI. And, often times we think that having a strategy to cover “all and everything” is just the right way to invest and get the needed results.

We are talking about paid advertising here. Let’s give a quick fact, shall we? 

Digital advertisers waste more than US$134.3M just in Q1 of 2022, and even though the forecast for 2023 looks a bit like a slow-down, there still will be a steady growth of 3.7% on ad spend.

So, where do you rank here?

Of course, we don’t say that spending money on paid ads is bad, as long as it brings you the results you are expecting. However, a lot of b2b companies, especially small & medium-sized businesses, see a significant loss in investment when it comes to paid ads. We know that this often comes to marketing-sales alignment and a lot of investments and activities for b2b teams depend on one another.

That’s why we need to understand why is it important and how to find an alternative to making a loss ad spending.

In this article, we’ll go over the pros and cons of paid advertising for B2B SMBs and see an advertising alternative for b2b marketers from a different angle. So if you’re ready to take your business success into your own hands and explore more cost-effective marketing and sales tactics, let’s get started.

Pros & Cons of Paid advertising

Paid advertising allows you to target specific audiences and offer them tailored ads, but can be expensive and less effective than other marketing activities, let’s say email marketing for example.

There are both pros and cons to paid advertising that need to be taken into consideration. If the cons are your more dominant side, you most definitely need to seek an alternative to paid ads.

On the plus side, these higher-cost solutions typically offer more targeting options and increased reach, as well as a retargeting option that can really help target an audience that has already interacted with your brand. As a result, you can use paid advertising to get an immediate jump-start on your marketing efforts and start generating people who know who you are right away – if done right of course.

The downside is that ads cost a lot of money — even if you have an effective strategy in place, it will require an investment of time and resources to obtain the desired results. Additionally, there is a risk that audience members may become oversaturated with online ads and disregard them altogether. Or the social media platform you are using might not have the proper audience (for example, b2b companies have a hard time advertising on Facebook, as the decision-makers don’t usually make a decision on buying a solution for their business needs on Facebook).

For this reason, knowing whether or not paid advertising suits your needs is key before committing to this strategy as part of your overall marketing plan.

The costs of Paid advertising

Paid advertising can provide you with a significant boost in traffic, but there are some associated costs, and if these costs are not directly converted into revenue, you might end up wasting millions on ad campaigns without a secured revenue income to cover it. It all depends on your targeting and conversion rates.

Some of the most common paid advertising options that B2B companies run include Google Ads, Facebook Ads, and LinkedIn Ads. These can often overcome your MRR and budget, and often require ongoing management to get the most out of them, meaning even more resources are needed to get the conversion going. On top of that, it is important to ensure that campaigns are targeted and effective, which will require an experienced team to cover, otherwise you could end up wasting money on ineffective ads.

Potential results of paid advertising

It can go both ways, you’ll either make it or break the bank.

One possible result of your paid advertising could be high traffic spikes, increased demo requests, or even trial sign-up, however, most of the time the B2B sales process is a lot different than the B2C and it takes additional actions and a lot more time to convert the potentials into paying clients. And this is where your paid ads can show very little results for a very high cost.

Let’s compare…

If you are a B2C company running paid ads, your buying journey will look something like this: The potential buyer sees your ads, makes a quick visit to your website, checks out the value – costs ratio, and if this fits firstly their needs and then their expectations, they add it to the cart, and conversion possibility is high from that point on.

When running a paid campaign as a B2B company you are presenting your solution for the first time to the potential buyer, and even if they see your ads dozens of times, explore your website, and contact you, this still doesn’t ensure that the money spent on your campaign will result into a paid client, as you need to establish a healthy client relationship and invest additional efforts and resources to make sure you close that deal.

We are not saying that running paid ads as a B2C company is easy, on the contrary. However, we need to point out that different sales cycle rules are followed in both cases and you need to understand the potential costs and benefits of paid advertising when deciding whether or not it is worth the investment.

Outbound prospecting as an alternative to paid ads

Okay, now what can be done as an alternative to paid ads?

We’ve seen that outbound prospecting is a fantastic alternative to paid advertising. This might be a direction that you’ve never explored as a marketer, however, it can be a great addition to your inbound marketing activities and an alternative to your ad spending.

Outbound prospecting is the proactive search for leads, rather than waiting for them to come to you via organic traffic, blog posts, or a paid ad. This involves going out and “networking” in order to find potential prospects and introduce them to your product or service. It can involve cold-emailing, traditional mail campaigns, using phone sales/cold calling, etc., as well as attending conferences, seminars, and trade shows…

You’ll actually be doing a very similar thing to your paid ads, it’ll just cost you waaay less and you can be in charge of the conversion and closing cycles.

It’s a great way of reaching out to people who may not be exposed to your company or product, similar to the paid ads, but, the expansion of your customer base will depend on leaving a good impression and establishing good client connections.

How to do good outbound prospecting as an alternative to paid ads

As mentioned above, outbound prospecting involves utilizing various sales tactics to reach out to potential customers, such as email campaigns, LinkedIn prospecting, and cold calls.

These methods allow you to connect directly with people who don’t already know about your product or service and introduce them to what you have to offer without requiring a direct budget like the CPC (cost per click) and CPL (cost per lead). Outbound prospecting can also be done through multiple channels of communication, similar to the paid ads that you will be running on different social media platforms, only this time you won’t be needing budgets for each channel.

The key to doing good outbound prospecting is actually the same as the key to successful paid ads: your targeting and content strategy.

The final cost round – paid ads vs. outbound prospecting

Paid ads are quite appealing and show great results for some companies, but outbound prospecting can be just as cost-effective, but it won’t break your bank.

Although you might think that it takes more time and effort, it actually shows up to be more cost-effective.

Let’s do some simple math:

We know that LinkedIn or Google paid ads will cost you at least 10 dollars per day (and that is only to be able to launch your campaign, this doesn’t necessarily mean that you’ll get leads in, and it sorely depends on the objection you set up for the campaign: awareness, traffic, lead generation etc.). 

Our own quick experiment has shown us that a warm lead can get up to 10% of your base deal, which then again depends on your conversion rates to get the real cost per lead.

If your base deal is around 1K dollars, your campaign might get up to 100 dollars per lead.

Then let’s say your average conversion rate is also 5% which is higher than the b2b industry average in general, you’ll need 20 leads to break even.

100×20=2000

You are already spending more than you’ll gain from your campaigns, which is not sustainable at all, is it?

By understanding who needs your product and what stage they may be in when considering purchasing it, you can create a powerful yet smart plan for connecting with them. Outbound prospecting allows customizing each message or email which will help us to get a higher engagement rate, thus more chances of booking an appointment or even closing the deal. Let’s take the smallest subscription at Sales.Rocks for 200 monthly spending on a yearly plan.

And let’s do simple math again:

If you contact 1000 prospects and your open rates are 60% you’ll most likely get a reply and booking rate of 5-6%. Out of 36 appointments, let’s take the same 5% conversion rate again, you’ll close about 2 clients which already makes you earnings of 2K for an investment of 200 dollars.

Here is why you should start with outbound prospecting

Outbound prospecting allows you to be incredibly selective in who you target and offers a more personalized approach to your ideal customers than simply paying for ads. You can build relationships with potential customers that last far beyond a one-time purchase. It also gives you a chance to learn more about your target audience and adjust your strategy accordingly.

Additionally, outbound prospecting opens up opportunities for referrals and word-of-mouth marketing — invaluable sources of leads that don’t require an ongoing financial investment.