When it comes to SaaS advertising, search ads convert better (4.40%) than display ads (0.57%), but display ads are more affordable ($0.59 CPC vs $2.41 CPC for search). The best strategy? Combine both: use search ads to capture high-intent leads and display ads for brand awareness and retargeting.
Key Points:
- Search Ads: Higher conversion rates, active user intent, better for lead generation.
- Display Ads: Lower CPC, passive user intent, ideal for brand visibility and retargeting.
- Best Approach: Match ad types to the customer journey – search ads for immediate conversions, display ads for long-term growth.
Quick Comparison:
| Aspect | Search Ads | Display Ads |
|---|---|---|
| Conversion Rate | 4.40% (higher) | 0.57% (lower) |
| Cost Per Click | $2.41 (higher) | $0.59 (lower) |
| User Intent | High (active search) | Low (passive browsing) |
| Primary Use | Lead generation | Brand awareness |
For SaaS marketers, balancing these two ad types ensures both short-term wins and long-term growth.
Google Search Ads vs Display Ads: Which Is More Profitable?
1. Display Ads Overview
Display ads are a popular part of digital advertising, appearing on websites and apps to connect with a wide online audience. For SaaS marketers, they offer a cost advantage with lower cost-per-click rates compared to search ads. However, their average conversion rate is just 0.57% [3], largely because users often encounter these ads while casually browsing.
| Metric | Display Ads Performance |
|---|---|
| Average Conversion Rate | 0.57% |
| Primary Use Cases | Brand awareness, Retargeting |
| User Intent Level | Passive/Low |
These ads use advanced targeting methods, including demographic, behavioral, and interest-based options, as well as retargeting. This allows SaaS marketers to focus on audiences with a higher likelihood of converting, helping to improve returns over time.
Successful SaaS campaigns often use dynamic budget adjustments and retargeting strategies to enhance results [4]. Retargeting, which targets users who have already interacted with your brand, tends to deliver better outcomes. To track performance, monitor these key metrics:
- Cost per acquisition (CPA)
- Return on ad spend (ROAS)
- Click-through rates (CTR)
- Conversion rates by audience segment
For the best results, prioritize audiences more likely to engage, such as website visitors or trial users [1]. Display ads are essential for building brand awareness and nurturing potential customers through repeated exposure. While they are great for creating recognition and engagement, search ads are better at capturing leads with higher intent – a topic we’ll dive into next.
2. Search Ads Overview
Search ads are a powerful tool for SaaS companies, offering an average conversion rate of 4.40%, which makes them a strong option for generating leads [3]. They work especially well for promoting free trials, demos, or niche software solutions where attracting users with clear intent is key.
| Metric | Data |
|---|---|
| Average Conversion Rate | 4.40% |
| Software Industry Average | 2.58% |
| Primary Goals | Lead generation, Direct response |
| User Intent | Active/High |
What makes search ads so effective? They allow you to target users who are actively searching for solutions. For instance, one SaaS company boosted conversion rates by 25% and cut cost-per-acquisition (CPA) by 30% simply by refining keyword targeting and optimizing landing pages.
To get the most out of search ads, SaaS marketers should:
- Focus on high-intent keywords to attract the right audience.
- Ensure ad copy matches the landing page for a seamless experience.
- Improve quality scores to reduce costs and increase ad visibility.
- Adjust budgets based on campaign performance to maximize ROI.
Although search ads can come with higher costs per click (CPC), their strong conversion rates often deliver better returns when campaigns are well-optimized. Success depends on regularly tracking key performance indicators (KPIs) and making data-driven adjustments.
Search ads shine when connecting SaaS businesses with users at key decision-making moments – whether they’re comparing software options, evaluating features, or considering alternatives to competitors. They are a go-to tool for lead generation but should be balanced against display ads to determine the best overall strategy.
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Pros and Cons of Each Ad Type
When deciding between display and search ads for SaaS advertising, understanding their strengths and weaknesses is crucial for getting the most out of your budget. Here’s a quick breakdown:
| Aspect | Search Ads | Display Ads |
|---|---|---|
| Conversion Rate | Higher (4.40% average) | Lower (0.57% average) |
| User Intent | High, from active searchers | Low, from passive browsers |
| Cost Per Click | Higher, due to competition | Lower, more affordable |
| Targeting Precision | Keyword-focused | Broad demographic targeting |
| Primary Strength | Driving direct conversions | Building awareness & retargeting |
| Best Use Case | Engaging ready-to-buy users | Strengthening brand presence |
Search ads are perfect for capturing users who are actively searching for solutions, making them a strong choice for lead generation. SaaS companies offering niche products or targeted software solutions often see great results with this format [1].
On the other hand, display ads are excellent for retargeting campaigns. They help re-engage users who have already shown interest in your product or service. While their conversion rates are lower, they play a key role in increasing brand visibility and supporting broader marketing goals [2].
The best approach is to match the ad type to the customer journey. Use search ads to meet immediate demand and generate leads, while display ads can help nurture interest and maintain visibility. Many SaaS businesses find success by allocating more of their budget to search ads for direct response campaigns and using display ads selectively for retargeting and brand-building purposes.
This mix not only drives immediate results but also supports long-term goals like improving customer lifetime value and retention. By strategically combining both channels, SaaS marketers can build a well-rounded advertising strategy that delivers both short-term wins and sustainable growth.
Conclusion
SaaS companies can boost ROI by using a mix of search and display ads. Data shows that search ads outperform in direct conversions, with an average rate of 4.40% compared to 0.57% for display ads [3].
This two-pronged approach combines quick results with steady growth, aligning with SaaS business goals. Use search ads to target high-intent keywords that drive conversions, while display ads are better suited for raising brand awareness and running retargeting campaigns.
SaaS marketers have shared case studies showing that pairing search ads for conversions with display ads for visibility delivers stronger outcomes [4]. To get the most out of your campaigns, focus on advanced targeting, retargeting strategies, and dynamic budget adjustments based on performance.
Search ads meet immediate demand, while display ads help build recognition and support retargeting. By aligning these channels with different stages of the customer journey, you can create a well-rounded strategy that delivers both quick wins and long-term growth.
FAQs
Are search ads or display ads better for SaaS?
For SaaS, search ads tend to perform better, boasting a conversion rate of 4.40% compared to just 0.57% for display ads [3]. This difference comes down to two main reasons:
- User Intent: Search ads target people actively seeking solutions.
- Banner Blindness: Many users overlook display ads due to overexposure, a phenomenon known as ‘banner blindness’ [2].
Is Google Ads effective for SaaS?
Absolutely. Google Ads works well for SaaS, particularly when focusing on high-intent searches. Its effectiveness hinges on a few crucial factors:
| Factor | Why It Matters |
|---|---|
| Keyword Intent | Targets users ready to take action. |
| Campaign Type | Search ads drive better conversions. |
| Retargeting | Display ads can re-engage potential customers. |
To get the most out of Google Ads, SaaS companies should zero in on relevant keywords and fine-tune campaigns based on performance data [1].
"SaaS businesses should track metrics like conversion rate, CPC, and ROAS to measure Google Ads effectiveness" [1].
These insights help SaaS marketers navigate ad choices and improve their return on investment.
