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Lenny's Knowledge Sketch · Performance Marketing

Paid Growth Is for Everyone

Timothy Davis
Head of Performance Marketing, Shopify
2024
The Thesis

Paid Search for Every Company

GOOGLE SEARCHPAID ADSUSER-DRIVEN INTENT
"Paid is for everyone. If you look at the way each platform is doing, Google introducing AI, plus with paid taking up the first four spots, you have to scroll pretty far down to get to an organic listing."
  • Paid search is user-driven: customers type keywords you can respond to
  • Every platform now favors paid over organic; Google paid dominates first page
  • Meta and TikTok are pay-to-play; organic reach is essentially dead
  • Even "organic-first" companies benefit from paid search floor
Discovery

The "Signs of Life" Test Framework

  • Start with your own data: Load existing customers into platform to build lookalike audiences
  • Test lookalike tiers: 1%, 2-4%, 5-7%, 8%+ — 1% is tightest, most likely to work
  • Limited budget? Start with 1% only; you know they correlate to current customers
  • Scale when proven: Once you see positive signal, build full campaign structure
  • Creative matters by platform: What works on Meta will flop on TikTok — test fresh creative per channel
1%
tightest lookalike match
4
tiers to test
$0
minimum to start
The test mindsetDon't go all-in when you see signs of life. Validate the targeting, the creative, the messaging first. Move fast but smart.
The Work

What Agencies Miss (And How to Fix)

  • Ego marketing: Most focus on impression share and "being #1 on page"
  • The real game: Show ads to the right person as often as possible
  • Account health ignored: People miss obvious wins like pausing poor-performing ads that tank quality score
  • Ad relevance neglected: One bad ad can drag down entire account quality and raise CPC across the board
  • Data is ignored: Agencies collect reports but don't act on the signal Google provides
Google quality metrics

Google tells you exactly what to fix: improve ad relevance, add headlines, unpin ad sets. Most teams just... don't do it.

The account-level quality effect

Turning off one poor ad can improve click-through rate, lower CPC, and boost impressions across the entire account.

Core Playbook

The Reports That Matter

  • Brand vs. non-brand split: Different quality metrics for each; track CTR, landing page experience, ad relevance separately
  • Ad strength distribution: Most spend should go to excellent/good ads; pausing poor ones frees budget for winners
  • CPC vs. quality score: High CPC + high quality = leverage; high CPC + low quality = investigation needed
  • Focus on alignment: If goal is conversions, track CTR and conversion rate only—not impressions or reach
Timothy's report philosophyBuild visualizations that show you where the holes are. Don't rely on raw data—make the signal visible so action becomes obvious.
Contrarian

Performance Marketing Myths

We're doing great if we're #1 in impression shareINSTEAD →Impression share is ego marketing. Real win: show ads to right person as often as they need to see you.
We should run every platform simultaneouslyINSTEAD →Start with signs of life, validate creative and messaging per channel, then scale. Each platform requires different creative.
Click-through rate and CAC are the only metrics that matterINSTEAD →Ad relevance, quality score, and account-level health predict success. Focus on what you can control.
Our CPC is high because our industry is expensiveINSTEAD →Talk to your platform partner for anonymized benchmarks. Odds are you have fixable quality issues dragging CPC up.
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