Larry Kim, WordStream
Storytelling Innovator Series

Larry Kim Founder of WordStream: An Interview on the Evolution of PPC Advertising and Search

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WordStream, Inc. is a software-as-a-service (SaaS) solution for brands looking to beef up their PPC and search-marketing programs. The company develops search marketing software, provides managed PPC advertising services, and shares online marketing advice and thought leadership through its blog. In this week’s Innovator Series interview, I speak with Larry Kim, WordStream’s founder and CTO, about the journey he took to grow his company from a small team to a national powerhouse in the online world.

Question 1: Tell me about yourself. What drew you to the online world of search and marketing? Can you tell me about your career path?

I started out after finishing an electrical engineering undergrad program, doing software product work for a big software company during the dot-com bubble. Eventually, I went on my own as a sole proprietor agency, doing mostly SEM (search engine marketing) work, which led to writing my own software to make life easier. I bootstrapped the company to grow, using consulting revenues to pay for software engineers and sales and marketing people.

Today, I’ve analyzed nearly $10 billion dollars in PPC/AdWords spend and enjoy sharing the insights and knowledge I’ve learned from that, both on my blog and as a speaker at conferences. I also have quite a bit of experience in early stage start-ups, having recently grown my company from nothing at all to one of the fastest-growing business in America, with over $12 million in annual revenues, over 120 employees, and thousands of customers.

Q2: Most people know you from your work with WordStream. What was the catalyst or inspiration for starting this company back in 2006?

At first, I was just developing software tools to make my PPC advertising and SEO consulting work easier. I thought that a lot of people could use the PPC and keyword management software I was creating. Later, I realized that the software business was potentially much more valuable than the services business, so I raised a few million in venture funding to more aggressively pursue the opportunity.

Q3: You’re a pioneer in the search ecosystem. People turn to you for information on PPC, SEO, and more. How did you become known as an influencer in this space—was it a particular channel that led you to the spotlight, or a certain skill set?

I don’t consider myself to be a pioneer, actually. I’m more of a second-generation search ecosystem kind of person. Folks like Danny Sullivan, Rand Fishkin, and many others were talking about search marketing for over a decade before I ever did. I only started blogging five years ago and speaking at conferences just 18 months ago. At the time, I knew that with so many established thought leaders, it would be very difficult to break into the space so late in the game.

Thus, my strategy was to commit to a niche and try to offer content that was very different from everything else out there. My initial niche was the data science of PPC marketing. We basically reverse-engineered how AdWords really works using huge volumes of data to explain things like how Google ranks competing ads, how it determines your cost per click, what’s a good conversion rate, what’s a good click-through rate, etc. These kinds of long-form, in-depth articles ended up getting a ton of attention because this was a niche wherein such in-depth research hadn’t previously been conducted.

Later, having established a presence within a niche, I’ve gradually branched out into other topic areas like social media, content marketing and entrepreneurship. But that was only after having committed to a niche for well over a year.

Social media certainly helped in getting people to read my stuff, but I’m pretty sure it wouldn’t have been that helpful if I didn’t have original and unusual content to share. Since the very earliest days of WordStream, I’ve been committed to blogging regularly, which means sharing our research, insights, opinions, and lessons for other search marketers. The WordStream blog has set us apart as influential in the search space, but it’s also a huge inbound marketing channel for us, driving over 700,000 visits every month and growing by 8 percent every month for the last five years.

Q4: As the SEO world has changed, so has the WordStream platform (going from a keyword software tool to a destination for paid search marketing expertise). How did you remain at the forefront of this industry shift as an organization?

It was hard. We originally started out marketing keyword research tools, and then, due to a change in business strategy, we suddenly had to become thought leaders in the field of PPC advertising. As I mentioned earlier, the key was analyzing and mapping out both the kinds of content were being published by existing thought leaders in the space, and any white space—a niche where we could operate in and thrive (i.e. the data science of PPC marketing).

This process is pretty similar to how a software product manager (which is my background) would do competitive analysis on competing products. I think content marketers ought to be doing the same thing.

Q5: You’re also an active writer for major industry media hubs such as Inc. Magazine and Search Engine Land. How do you balance your time as CTO for WordStream and as a regular contributor to major publications?

I’m balancing even more since my wife and I brought #PPCKid into the world! As far as writing columns, I’m writing about things I’m passionate about—these ideas and opinions don’t take a lot of work to come up with. I’m reading industry news and chatting with folks on social channels every day, so the things I write about are naturally born from those interactions and insights. The more involved you are, I think, the easier it is to create content about your industry.

It also probably helps that I have billions of dollars of ad spend to analyze, and there’s no shortage of interesting things to write about in there.

Q6: You’re always one of the first people to publish a post on LinkedIn in response to an industry trend or event. (Example) What’s your creative process like? How do you read and interpret a trend and then turn around an opinion-based article so quickly?

Like I said earlier, if I’ve picked something up in the news it’s usually something that I passionate about or something I’ve previously researched. For example, the Hotels.com story was fresh in my mind because several years ago, I did an internal analysis of the structure of big sites such as eBay, Expedia, Hotels.com, etc. to figure out how they were ranking on so many terms.

Q7: What’s one trend you’re following into 2015, and how will it impact the way brands reach their audiences?

There are two things I’m watching closely and will continue to in the next few months. The first, in PPC marketing, is the rise of mobile, native-ad formats and new ad-targeting options that let you target ads to specific individuals. In the last year, time spent in mobile apps surpassed time spent on desktops! Sessions that used to start with web searches are now starting directly within branded apps. Marketers will need to embrace new mobile, native-ad formats and ad-targeting options (e.g. Facebook Atlas) in order to get their marketing messages to the right people, where they are actually spending their online time.

The second is how internal/paid and organic teams work together. I know everyone’s talked a lot about this for years, but you know what? They’re still pretty siloed. I’m thinking this may be the year that we finally get our paid-ads team working with the organic team, and the intersection where they meet is in content marketing/social ads/content remarketing, pushing social ads to promote the best content on your site, then remarketing to people who read it to convert them into leads/sales.

Q8: What are the top three business lessons you’ve learned from starting WordStream?

Listen to the criticisms you’ll get from early customers and funders. Use it; don’t dismiss it. I remember shoving all of my VC rejection letters in a drawer and just thinking, “Man, they’re harsh.” After a while though, I went back and read a Bain Capital rejection letter—one I’d thought was just super picky and critical. (I mean, they’d pointed out every little flaw in my plan.) I went line by line through the whole thing and addressed each item. Then I went through the rest of the rejections. Getting over the fear of that criticism and addressing it head-on allowed me to make the changes that made the company a hit with investors.

I also learned early that you should focus on what you do well. I prefer such things as blogging or analyzing conversion rates to business operations. Now I don’t actually manage any people at all! I rely on my amazing business partner, Ralph Folz, CEO of WordStream, to manage the executive team, which in turn manages the different departments. It was the best decision the company ever made. If you’re ever thinking of expanding your practice, one way to do this without having to manage people would be to first hire a COO to manage the business of managing your business for you. Don’t force yourself to do the things you aren’t good at or have no interest in doing. You’re better off focusing on your superpowers—stuff that only you can do, and the things you’re exceptional at doing.

The best content marketing tip I ever got was from Eric Enge, who, at a conference in Boston back in 2009 (around the time I started blogging), told me not to ever buy links for any reason. (This was long before the rise of various Zoogle creatures). I’m glad I took his advice!

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