Online Ads May Not Be the Most Efficient Way to Grow Your Demand Gen Funnel

Hi, everyone, I'm Arun, the founder of FunnelEnvy. We help demand gen marketers increase pipeline and revenue through revenue funnel optimization. Today I want to spend a little bit of time talking about why online ads might not be the most efficient way to grow your demand and revenue funnel.

This came about because I've been reading more in a lot of popular blogs, including Rand Fishkin, about something being wrong—or, as he put it, rotten—in the world of online advertising. In the article, he cites some eye‑opening results from prominent brands like Chase and Uber, shedding light on millions of dollars in Uber’s case—about $150 million—of wasted ad spend.

Closer to home, we work with a lot of B2B demand gen marketers. Studies suggest that about 75% of the advertising B2B brands are doing fails to produce long‑term growth. That’s a big problem. So, what do we do about it?

Let’s take a step back. Assume you’re a growth‑stage B2B demand gen organization that needs to grow pipeline by 30%—and do it fast, in the next quarter. Where do you invest your dollars?

Of course, you’ve got the paid channels. They’re fast to add, but expensive and often less efficient. On the other hand, owned channels—email, organic search, and social—are cost‑effective long term but harder and slower to scale.

The overlooked element is the website. All channels—paid and owned—funnel traffic there. It’s often the least optimized area, with static websites that are harder for organizations to execute on. But optimizing the website funnel can be very efficient to scale.

When we look across our high‑growth customers, about 70–75% of traffic typically comes from direct and organic sources. Only 25–30% comes from paid channels. So if you grow exclusively through paid, you’re optimizing maybe 10–15% of your traffic—making it really hard to grow the entire funnel. And you eventually hit diminishing returns as low‑hanging fruit gets exhausted and costs rise.

Instead, web funnel optimization distributes growth across all channels. Even modest improvements across all traffic sources can yield more leads and revenue than focusing on paid alone.

Another common mistake is focusing only on top‑of‑funnel metrics. By improving conversion rates further down the funnel—from lead to opportunity to closed deal—you get a much greater impact on revenue and acquisition cost.

So, optimizing the entire revenue funnel—not just leads—can generate far better incremental revenue.

Takeaways:

• Paid channels are fast but inefficient and prone to diminishing returns.
• Most traffic comes from direct or organic sources, often with buyers at different stages.
• Optimizing the website funnel across buying stages accelerates growth across every acquisition channel.

That’s what we call revenue funnel optimization—optimizing the entire customer journey to revenue.

Thanks for listening!