I Spent $1,000 on Reddit Ads… Here’s What I Learned 💸
Think ads are the secret to scaling your SaaS? Think again. 🛑 I recently put that theory to the test, spending $1,075 on Reddit ads for my B2B Chrome extension, Automagical Nudge. The results were… eye-opening. While we saw a massive spike in traffic and over 1,200 clicks, our actual growth stayed completely flat. 📉
In this post, inspired by my recent video, I’m breaking down the exact spend, the shockingly low CTR, why I now view ads as a “psychological vitamin,” and my golden rule for when you should *actually* start spending on paid acquisition. Spoiler: If you’re under $1M-$2M ARR, you might be throwing money into a burning pit.
The Experiment: $1,075 on Reddit Ads for a B2B SaaS
As a B2B SaaS company, we decided to allocate a little over a grand to Reddit advertising to see if it could move the needle for Automagical Nudge, our Chrome extension for automated email follow-ups and RevOps for SMBs. We didn’t have a strong organic Reddit strategy to compare against, so any lift would, theoretically, be attributable to the ads.
Here’s what the data showed:
- Exact Spend: $1,075
- Total Clicks: ~1,230
- Click-Through Rate (CTR): Under 1%
The Sobering Reality: Flat Growth
Despite the influx of clicks and a significant jump in traffic compared to our baseline, the impact on our actual user growth was negligible. Our total user count for Automagical Nudge remained largely consistent with its pre-ad growth rate.
So, a lot of clicks, no actual growth. Was it worth it? In my experience, no.
Why Ads Can Be a “Psychological Vitamin”
I’ve come to view early-stage ad spend as a “psychological vitamin.” It feels good, it’s easy to do, and you get a quick feedback loop of activity (clicks, impressions) that makes you *think* you’re being productive. You just “pop the vitamin” (click a button to launch a campaign) and hope it’s working.
However, the difficulty in acquiring *paying customers* through ads, especially without a substantial budget, is immense. This “feel-good” activity often distracts from the harder, more impactful work.
“Ads, I think, are very easy. They feel good. It’s like taking a vitamin where it’s very simple to do. You just pop the vitamin and you think it’s working and you hope it’s working. You click a button, you get a really short feedback loop of feeling good about what you just did.”
The Golden Rule: When to Actually Consider Ads
Based on my experience, here’s my rule of thumb: If you are making less than $1 million to $2 million in Annual Recurring Revenue (ARR), you should probably not throw money into the burning pit that is ad spend. At this early stage, your focus should be on proving product-market fit, nailing your messaging, and identifying organic channels that resonate deeply with your target audience.
The Crucial Math: CAC vs. LTV
Before you even *think* about spending significantly on ads, you need to have a clear understanding of your Customer Acquisition Cost (CAC) versus Customer Lifetime Value (LTV). You must be 100% sure that your ad spend results in a customer who spends significantly more than the cost of acquiring them. Otherwise, you’re literally just spending more money on ads than you’re getting back from the customers acquired through that channel.
In our small case study, our CAC from Reddit ads was essentially infinite, as we acquired no new customers despite the clicks.
What *Actually* Works: Sustainable Marketing Strategies
Instead of chasing the quick but often deceptive wins of ad spend, especially for early-stage startups, I advocate for marketing strategies that might have a longer feedback loop but build durable, sustaining impact:
- Content Marketing: Providing value and establishing authority.
- Partnerships: Leveraging existing audiences and ecosystems.
- Integrations: Becoming a part of your users’ existing workflows.
- Community Building: Engaging directly with your audience where they hang out.
These strategies are less about instant gratification and more about building a robust foundation for long-term growth.
Final Thoughts: Stop Burning Money on “Bad” Strategies
A common misconception among startups is that marketing equates to two things: ad spend and cold outreach. In my opinion, these are often two of the worst strategies to start with if you’re trying to optimize for efficient growth and a strong go-to-market strategy. They can be incredibly difficult to scale profitably without significant resources and a finely-tuned product.
Spend your time doing marketing that actually works for *your* stage and *your* product, not just burning money through ad spend because it feels like “what you’re supposed to do.”
I’m not selling you anything here, just sharing real-life lessons learned from the trenches. Subscribe for more of our experiences in running marketing campaigns and building our SaaS.
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