Chapter 3: Channel Selection

John and Alex both now have a clear understanding of demand capture and demand generation. Too tired after the discussions, they decide to call off the day and head to their usual bar, only to find it closed for the night. 

They wandered to a nearby grocery store, where the shelves were mostly empty, except for a few kombucha bottles. The salesperson enthusiastically recommended it. But it felt like the salesperson was pushing kombucha simply because it was all they had.

This experience reminded them of the overwhelming number of channels and strategies they had to sift through, each claiming to be the silver bullet for ad success. It struck them how often advice in all the articles they read online seemed driven by availability rather than suitability. 

The upcoming challenge for John and Alex wasn’t just about finding any channel, but finding the right one amidst all the noise.

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Channel selection isn’t just a part of the strategy; it’s the very spine holding it all together. It determines where your messages land and how effectively they convert casual interest into concrete action.

Start with Demand Capture, Then Switch to Demand Gen

You’re about to launch an ad campaign for your B2B SaaS product. You might be tempted to go all in and use every available channel. But here’s the catch—you don’t need to do everything together. 

Start with demand capture—it’s a simple, cost-effective approach that gets the most bang for your buck. Focus your budget here first, as it’s generally less expensive and provides quicker returns.

Once you’ve maximized the potential of demand capture and profitability starts to taper off, that’s when you pivot to demand generation. 

This phased approach ensures you’re making the most of your resources, allowing you to measure, optimize, and expand thoughtfully. 

💡Core Idea

Choosing between Demand Capture and Demand Gen is about smart budget allocation: spend wisely where it counts and scale up as needed. Don’t get fancy with your ads strategy. Get efficient. For most companies, Demand Capture is cheaper than Demand Gen. So, even if it feels “less sexy,” just do Demand Capture. You need to drive the most pipeline with the budget you have.

Steps to Select the Right Ad Channel

Here is a step-by-step approach you need to follow to select the right channel 

Step 0: Should You Run Ads?

Let’s quickly revisit the prerequisites from Chapter 1. 

• Product-Market Fit (PMF): Is there a clear need for your product in the market?
• Existing Marketing Channel: Do you have a channel that’s already working for you?
• Budget for Initial Experiments: Do you have the financial stability to run initial experiments without jeopardizing your company?
• Tested Messaging – Have you finalized a messaging? 

Once you have all the boxes ticked, you’re ready to move on. 

Step 1: Do Your Research

Understanding the Natural Buying Journey

To effectively reach your customers, you need to understand their natural buying journey. 

Now while you very well know what a buying journey is, let me explain what a natural buying journey is. 

Imagine your potential customers left on their own, making purchasing decisions without any external influence. The path they take, from recognizing a need to making a purchase decision, is the essence of the natural buying journey. By identifying this path, you can position your ads strategically along the journey to maximize impact. Your goal is to be as close to their decision-making point as possible.

For instance, if you offer a contract management tool, consider where your potential customers might naturally look for solutions. They might start their search on Google, visit review sites like G2 or Capterra, check out listicles on popular tech blogs, or explore options on marketplaces like AppExchange. Also, consider all the touchpoints you directly won’t be able to influence with ads, like asking their peers, looking back at their previous experiences or asking in communities.

💡Core Idea

If the closest point to the decision-making stage is in a marketplace—run ads in the marketplace. If it’s on a top 10 listing website—place your ads there. If it’s on Google— leverage Google Ads.

Prioritize channels closer to the end of the buying journey. This approach aligns with why we focus on demand capture first—it’s usually the most cost-effective way to reach potential customers.

Analyze Competitor Strategies

Take a close look at your competitors. What channels are they using? What keywords are they targeting? One thing to keep in mind here is that a lot of people do something because they know only that. So its a high chance your competitors might be missing on the channels you can take advantage of. 

Tip: It’s good to see what others are doing and then do it your own way. Explore opportunities they might have overlooked and leverage them to your advantage. 

Step 2: Is Running Retargeting Enough?

Retargeting can be gold if you’ve got a large, engaged audience. If the traffic coming to your higher intent pages is enough to build an audience without running cold ads, test it. Spending your budget on retargeting across multiple platforms can often pay off.

Running retargeting ads and nothing else can sometimes give you better results than doing anything else. But remember, for most companies, the audience size won’t be enough to fully leverage this strategy. A lot of companies struggle to build an audience large enough to meet the minimum criteria for retargeting ads on most channels. In these cases, just running retargeting ads might not be enough, especially with a tighter budget ($500-$2,000 USD).

Fun fact: I know a DevTech unicorn that relied entirely on retargeting for its ad strategy, and it worked wonders for them. 

Step 3: If RT Isn’t Enough, Evaluating Demand Capture 

If you have scaled retargeting to the maximum extent, it’s time to add demand capture to the mix. It’s likely that most brands won’t be able to allocate their entire budget to retargeting. Therefore, you might need to incorporate demand capture from the beginning.  

Common Demand Capture Channels for B2B SaaS:

• Search Engines: Like Google, Bing
• Review Sites: Like G2, Capterra 
• Listicles: Look for keywords like you would for search, look at what listicle articles are ranking there that will also let you pay them to rank you high on that list.
• Marketplaces: Like Shopify Marketplace, Salesforce AppExchange

Essentials for Successful Demand Capture:

1. Costs: Ensure you have sufficient funds to test different strategies. P.S. – We’ll dive deeper into costs and budget considerations in later chapters.

2. Audience Scale: Determine if there’s enough interest in your offering. Is your target audience is actively searching for solutions like yours? Are there enough people on your list who are following the natural buying path? For example, with Google Ads, do you have adequate search volume? Are review sites you’re targeting getting enough traffic?

3. Traffic Quality (ICP vs. Non-ICP): Focus on your ICP. If most of the traffic you’re attracting isn’t from your ICP, you’re wasting your budget. In many demand capture channels, it’s challenging to filter out non-ICP audiences. For instance, consider that you’re targeting HRIS software buyers from large enterprises. You’ll likely find that SMBs and small startups are also searching for similar solutions. If these non-ICP businesses are also clicking on your ads, you’re not efficiently spending your budget.

📈 Case Study
Brief: We worked with a client offering an asset management platform. The platform had varying intent across audience segments. Our goal was to refine their ads strategy to improve performance.
Challenge: We couldn’t scale demand capture to meet targets due to varying intent.	Solution: After maximizing demand capture, we pivoted to demand generation to achieve the desired results.
Value delivered: Tested channels: We explored search platforms, review sites, listicles, and marketplaces. Scaled what worked: Increased investment in channels generating SQLs. Refined the Funnel: Optimized the funnel to increase conversion rates and filter out as many non-ICPs as possible.

Exceptions to Demand Capture

There are instances when running any demand capture at all may not be feasible. It could be because of any of the three reasons below or a combination.

1. You’re creating a new category: In this scenario, the typical demand capture channels might not be effective since there’s no demand to capture. 

2. You’re selling to enterprises: Targeting enterprise clients often requires a different approach. If you’re targeting a limited total addressable market of, say, 500 companies, most won’t be actively looking to buy. Even if 5% are in the market each month, that’s only around 10 companies. Many of these deals will go to vendors they’ve used before or those recommended by peers. This leaves too little demand to run demand capture. 

3. Extremely high competition with much higher ACV than yours: When the market is saturated with competitors, and your Average Contract Value (ACV) is significantly lower than that of market leaders, demand capture can become too expensive. Other brands can afford to spend a lot more on ads because they have higher margins; You don’t. So, ads may not be profitable for you, but it is for them.

Step 4: After Demand Capture, Start Demand Gen

Demand Generation: The Cool Side of Marketing

Demand generation is where marketing gets exciting:

• You get to have fun with messaging.
• You can target the right people at the right companies without too many limitations.

But every great thing has a catch. This, too, has a catch.

It’s very hard to target companies currently in-market to buy. So when you look at ROI are attributable revenue brought in v/s ad spends, it’s very expensive. 

Ouch..

Why Not Start with Demand Gen?

Starting with demand generation can be costly and less efficient without knowing who’s actively looking for your solutions. It typically requires more touchpoints and extensive testing, which increases expenses.

Demand gen is about more than just visibility. Most of the people you’re targeting aren’t in market yet. So you’re  shifting their priorities. 

You’re shifting priorities of potential customers who might not even be searching for solutions yet but could significantly benefit from your product.

Common Demand Gen channels for B2B SaaS:

• LinkedIn
• Meta
• Search (MoFu Keywords)
• Channel aggregators like Growthchannel.com
• ABM tools like 6sense, Demandbase, Influ2

Since LinkedIn is by far the most common DG channel, let’s look at the checklist for it:

1. Can you Build a Large Enough List?

Can you create a database of companies that either have shown interest or match the profile of your ideal customer (ICP)?

P.S. – We’ll unpack this more in the coming chapters.

Audience Size Matters

How big is your audience? Here’s a quick rundown:

• 5k people: Manageable.
• 10k-20k people: Ideal range.
• Beyond 20k people: Could be hit or miss. You risk going too broad and losing focus.
• Below 5k people: There’s a real risk of not generating enough demand.

Pro Tip: Upload your list of companies to LinkedIn and use filters to fine-tune your audience count.

2. Do you Have Enough Budget?

Crunching numbers for demand gen is trickier than for demand capture. If your ICP isn’t actively seeking solutions, no ad, no matter how slick, can make them start. Plus, in a mid-market enterprise, even if you catch someone’s interest, management might stall any new purchases.

Reality Check: Solving for attribution in demand gen is tough. Many companies, including Factors.ai and HubSpot, are on the case, trying to bridge this gap.

3. Will your Management Hang Tight or Bail?

Does your management trust you enough to invest 4-6 months with potentially no visible results? This is the reality of nurturing leads through demand gen.

Additionally, once results do start showing, is your management comfortable with more leading indicators (like engagement metrics) rather than just lagging indicators (like sales conversions)?