How does Google (Ads) Runs a $100B 'Growth Product' Machine?

Breaking Down Google Ads ‘Growth Product’ Model & Execution

☀️ Intro

I recorded a podcast episode with Jean-Mathieu Chabas (JM) a few weeks ago.

JM previously headed Growth at Google Ads (a $100B+ per annum beast) and is currently the Head of Growth Products at Databricks.

The podcast episode (which is coming later in a week) was packed with pearls, and I had quite a few aha moments.

Moreover, I believe many so-called best-in-class B2B SaaS startups have much to learn from Google's approach to Growth Product.

I predict that in 3 to 5 years, Google Ads's approach to Growth and structuring Growth Teams will become the predominant approach (the benchmark) throughout the startup industry. ❤️

At the moment, almost none of the fancy B2B SaaS startups and scaleups parading the Forbes 100 cloud list follow any of the Google Ads growth principles I share in this blog post.

The scale

1. Google Ads is a $100B+ a year Revenue machine, and it's only the SMB part. The scale is crazy. It’s like 50 Hubspots, 40 Dropboxes, or 25 Zooms. 🤣

2. This also means that 1% in revenue growth is a plus BILLION $ to the revenue bottom line. It is quite a motivation booster for the growth teams.

3. Moreover, there are only a few 1000s of sellers, which puts the average revenue generated per seller at $10M+.

The Growth Teams

The role of Growth teams at Google Ads is to improve customer campaign performance and they do so by:

1. Guiding the Core Product teams on ‘what to build?’
   ( = Product Roadmaps Aligment) | This part is quite commond in B2B SaaS startups.

2. Guiding the GTM teams on ‘which products to surface and to whom?’.
   ( = $ Incentives Aligment) | This almost never happens in B2B SaaS startups.

Just think about it! If Ad campaigns deliver a repeatable positive ROI, customers will never stop spending, resulting in a neverending $ loop! Hence, it’s the Growth team’s role to learn what drives the performance of an ad product (there are hundreds of existing products within Google Ads) and align those learnings through the Roadmaps with Core and Incentives with GTM.

Let’s reiterate, because this one is important.

Customers want to spend when it’s an ROI-positive investment; all they need is for Google Ads to provide them with enough ways to do so. Hence, if done correctly, Google Ads growth has no limits. This makes the Google Ads model so much more scaleable than, for example, business models of productivity tools.

The secret ingredients

1. It’s 80% Machine Learning work. 🤖

Google iterated on its Ads ML model for 20 years. The algorithmic approach to experimentation (rather manual) is Google’s Growth team superpower. So, you know, even Google’s Gemini was built on top of the Google Ads ML model.

Question: Is algorithmic experimentation the future of Growth? In which cases and scale is algorithmic experimentation applicable?

2. The Google Ads Growth team optimizes both for short-term and mainly for long-term success.

The Growth guidelines of what to sell and to whom per customer/segment to GTM are packaged in a three-layer cake, with the main weight being long-term.

Question: Why is the dominant paradigm in traditional B2B SaaS startups for Growth teams is to focus on short-term gains? Is Google’s long-term focus approach applicable to early-stage startups and scaleups?

3. GTM is much more than Sales.

GTM teams are customer advisors and serve as the customer frontline from product, operations, and technical perspectives. Their mission is to make customers successful by ensuring the adoption of the products packaged in Growth guidelines. They do so through PLG (in-product) and SLG (frontal sales). And, of course, GTM Incentives ($) are aligned accordingly!

Question: What value can we extract from Growth and GTM / Sales Collaboration (beyond PLS - Product Led Sales) in traditional B2B SaaS? How should this relationship be structured and incentivized?

The future (or present) of Google Ads

Google knows much better than any ‘Performance Marketing’ agency how to create large-scale, repeatable, high-performing campaigns simply because Google owns all of the campaign data (all of them). Moreover, Google's goals and Customers are aligned, which means that Campaign Success = Customer Success = Google Ads Success.

Google is taking (and will keep taking) campaign ‘controls’ from the customers and managing those campaigns all through (one-click) automation.

It’s the same reason that humans will not be allowed to drive in the distant future simply because autonomous cars drive better. Google Ads is on the way to becoming a one-click-go platform.

“...Here is my product (shoes). I want to spend $10 the most, so go!..”

Google will build the campaign, the ads, and the creatives based on best practices, the customer, and the product context, place the bids, and close the loop.

This means lower to no learning budgets, lower entry barriers, and faster cycles.

And what about the performance marketing agencies?

They must adapt by abstracting their focus from tactical ( = running a campaign) activities and going multi-channel.

Takeaways (for B2B SaaS Startups and Scaleups)

1. If you dream of reaching a multi-billion ARR, your business model must support such a scale within its DNA. Google’s Ad model does. It’s a money-printing machine.

2. Growth experimentation will shift toward algorithmic experimentation. ML will become the Growth team’s core competency.

3. Best startups empower Growth teams to focus on long-term Success. Chasing monthly targets should not be the only growth play.

4. In 99% of startups, the Growth - GTM (Sales) relationship does not exist. This must be fixed. Aligning incentives can help bridge this gap.

5. Are you paying the hefty $ to performance marketing agencies? Don’t. Do it in-house.