While investors closely examine revenue growth, profit margins, and debt levels, they often overlook a critical aspect: the sustainability of a company’s customer inquiries once its advertising budget is exhausted. Digital strategist Precious Thundu Chindongo emphasizes that addressing this issue requires just three questions and a single meeting.
During discussions with growing African businesses, investors and lenders typically focus on revenue growth rates, profit margins, and debt obligations. However, a key question is frequently omitted: how do customers discover this company, and what happens to that flow if advertising spending is abruptly halted?
This question warrants inclusion in the standard inquiry list, as capital for small businesses remains limited and increasingly demanding. The IFC estimates a financing gap of approximately $331 billion for micro, small, and medium enterprises in Sub-Saharan Africa, noting that many lack the necessary records for traditional credit assessments.
Where funding is available, a larger proportion is in the form of debt. According to Partech’s latest Africa report, debt accounted for 41% of all capital invested in African tech in 2025, up from 31% the previous year. Debt financing requires predictable cash flow, and a customer pipeline reliant on paid advertising is less stable than it appears on financial dashboards.
Growth dependent on continuous spending
Paid search and social media ads are powerful tools, but their effectiveness is controlled by external factors. Prices are determined through auctions, which tend to become more expensive over time. WordStream’s 2025 analysis of over 16,000 U.S. search campaigns revealed a 12.88% increase in the average Google Ads cost per click, with 87% of industries experiencing rises. While no equivalent data exists for Africa, the underlying trends are consistent across cities like Johannesburg, Lagos, and Nairobi.
In one instance, a South African consumer business with a substantial ad budget saw a larger competitor increase its share of search auctions from 52% to 73% in August. During that month, a week-long effort to scale this channel resulted in a 34.6% increase in spending but only a 6.7% rise in leads. On a social platform, doubling the monthly spend more than doubled the cost per conversion, from R24-R27 to R61.
These outcomes were not due to poor execution but rather the inherent nature of rented demand: businesses do not control pricing, and increased spending does not guarantee proportional customer growth.
Three key questions for a single meeting
First, determine the proportion of last quarter’s paying customers acquired through non-paid channels. Focus on actual customers, not leads, and verify the data using sales records, not ad platforms. If the founder cannot provide this information, that is a significant finding.
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Second, examine what occurred during the last reduction in ad spend. Request to see inquiry and sales data alongside the budget for that period. A pipeline that declines with spending is rented, while one that remains stable is at least partially owned.
Third, test whether someone searching for the company’s products or services in its city, without knowing its name, could find it. This can be done on a phone during the meeting. A business that appears only when its name is searched is serving existing demand rather than creating new demand.
Owned discoverability involves a website that ranks for relevant buyer searches, accurate map and directory listings, responsive reviews, and content addressing real questions. It requires investment in people, time, and often fees but builds long-term value instead of resetting monthly.
The same business illustrates this approach. Its unpaid channels, including organic search and direct visits, generated 153 closed deals in May, 206 in June, and 317 in July. In September, the company intentionally reduced total ad spend by 26%.
Leads from organic search reaching the pricing stage remained stable, with 245 in September compared to 244 in August, and organic search’s share of completed deals increased from 25% to 31%.
Owned assets also carry risks, as evidenced when the same business relaunched its website in March. Changes to page addresses broke old links, leading to a 22% drop in sessions and a 32% decline in leads month-over-month.
What founders should report
A concise quarterly report suffices, highlighting the share of paying customers from unpaid channels, sourced from the sales system. It should also track the number of core search terms ranking on the first page of results, demonstrating organic discoverability.
The role of paid advertising
This analysis does not dismiss the value of advertising. Paid campaigns are essential for quickly testing demand, launching products, entering new markets, or addressing seasonal gaps. They also provide insights into effective messaging, which can inform long-term content strategies.
