Frustrated with Google AdWords, a Portland, Ore.-based software company is re-funneling its marketing budget into charitable donations to see if the positive press can generate just as much Web traffic as the search giant’s ad program.
The experiment started last month, when Jama Software, a two-year old start-up that manufacturers collaborative product-development software, decided AdWords was getting too expensive while generating too few actual leads, and wanted to see if there was a better use for its small marketing budget.
“The average cost-per-click was getting more expensive. In some cases certain words were up to $5 to $10 a click, and our average cost-per-lead was exceeding $100,” said John Simpson, director of customer outreach and marketing. “We were doing optimization techniques — changing the copy on our site, changing the words we bought — and it was helping, but only a little.”
Eventually, Jama had to decide whether to put more money into optimization, or look elsewhere. “We thought, ‘What if we did something completely different?'” said Simpson. “And we already had this [charitable] program on the social side of the business.”
That charitable program consisted mostly of making a small donation every month to Kiva.org, a site that allows people or companies to give loans to entrepreneurs in the developing world. As a company that made collaborative software, Jama felt a synergistic kinship with Kiva, and wondered if a deeper relationship between the two might spark enough press to drive as much traffic to the site as Google did.
“This month, we totally turned off the Google channel,” said Simpson. “We’re going to set that money aside and invest in Kiva alone.”
Simpson estimates that Jama was spending 70 to 80 percent of its roughly $10,000 monthly advertising budget on Google AdWords. All that money, he said, now goes to Kiva loans.
Whether the new strategy will yield the same results as Google is still anyone’s guess. But Jama’s effort did receive a write up on the blog ReadWriteWeb last week that Simpson said caused “a big spike in traffic,” particularly as other outlets linked to the story.
In addition, Kiva loans have only a 2 percent default rate, according to the company’s Web site, which means the money Jama is now spending will likely be repaid.
But while media placements and Google AdWords may both drive traffic, the results are hardly the same. For one, Google lures in those already on the hunt for relevant topics, whereas blog posts about a company’s charitable efforts could reach almost anyone, and hence are likely to attract a much more general audience.
News stories also have a much shorter shelf life than targeted search terms. A blog or news outlet may cover a story when it breaks, but they are unlikely to revisit that story with any frequency, if at all. While Jama can buy a Google search term indefinitely, the company will soon find reporters less willing to put its charitable efforts on their front page.
Simpson acknowledged that the experiment would have to adjust to such realities as it progressed.
“Paid search is always there for you if we suddenly realize we don’t have an interesting angle or if there’s a lull in press coverage. We can always go and turn that back on,” he said. “I’m sure as this goes on, we will have to find more of a balance. ”
In the meantime, Simpson said Jama felt better about what it was doing with its marketing budget — “I’d rather be giving my money to Kiva than helping Google get a little richer,” he said — and hoped other companies would follow suit.
“We know that all companies have to run their business, but all things being equal, [they might] prefer to give their business to a company where there is a good will component,” he said.
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