If you are looking for sustainable growth opportunities and meet the following criteria, you are in the right place.
- Your agency hasn’t hit the multi-million dollar mark yet.
- Your agency is directly responsible for PPC fulfillment.
- PPC is not the most profitable product for your agency.
These are the main factors contributing to the PPC woes, creating untapped potential for digital marketing companies.
Here’s an explanation of the PPC woes and their remedies, so you’ll have an efficient way to grow your agency.
The PPC dilemma explained
Digital marketing agencies must deliver high-quality PPC to attract and retain the right customers. However, resources are limited and PPC is often not the most important profit driver.
Institutions have to provide it, which inevitably diverts resources from more valuable activities.
This is the PPC dilemma.
The economics behind the dilemma
There is no need to panic or try to skip class.
This is not an economics lecture.
Having said that, the connection between the PPC dilemma and this trusted social science will help you implement this solution with confidence.
Thankfully, the connection is very simple, so it only takes a minute.
economies of scale
The “million dollar mark” qualifier mentioned above is based on an understanding of economies of scale.
According to Wilkenton’s Articles on Investopedia,
“Economies of scale are an important concept for any business in any industry and represent the cost savings and competitive advantage of large businesses over small businesses.”
Multi-million dollar institutions enjoying economies of scale are likely no suffers from the PPC (pay-per-click) dilemma described below and is not eligible for the corresponding growth opportunities.
Translation: If you are not an Inc 5000 organization, read on.
diminishing returns
Understanding the PPC dilemma is understanding law of diminishing returnswhich observes that output suffers when factors of production increase.
Key terms to define and personalize:
- output: These are your deliverables that generate revenue for your agency.
- FOP (factor of production): any resource you use to provide the service.
Your FOP includes all the resources you need to complete each of your agency’s products, such as SEO, web design, PPC, and more.
what did i say?
I told you it would be painless.
The bottom line (so far) is: your production factor should include PPC fulfillment if PPC is your most profitable product; otherwise, it will hinder your growth. This could be current or future growth, depending on when you reach your optimal capacity.
Either way, if you can ease the PPC fulfillment of your agency’s factors of production, while continuing to profit from its outputs/deliverables, you’ll grow.
Now that I’ve shown the “what” of the PPC dilemma, I’ll get into the practical aspects of how to solve it.
Top 4 PPC Fulfillment Options
So, how can an agency deliver high-quality PPC while keeping its associated production factors lean?
Below is a list of the most viable PPC fulfillment options, each with their pros and cons.
Determine which one enables you to eliminate PPC fulfillment as FOP while continuing to profit from deliverables in your output.
Existing internal talent
This method of fulfillment requires existing employees (current employees with additional responsibilities) to manage the PPC account.
advantage:
- Accountability – Employees have a high degree of responsibility to their employers and therefore have a strong incentive to do a good job.
- control – Ability to determine your PPC manager’s schedule, bandwidth, and more.
- communicate – Internal staff usually have fast response times.
- fluidity– Internal teams are fully integrated with existing tools and processes.
- promise – Employers enjoy employee loyalty, provided a healthy work culture is established.
shortcoming:
- interrupt – according to a A recent study According to the U.S. Bureau of Labor Statistics, employee turnover is at an all-time high. Employee turnover creates a lot of upheaval in this basket of eggs model.
- Require – You are responsible for developing and maintaining the infrastructure required to effectively perform PPC fulfillment.
- limited results – Existing employees have other responsibilities in addition to PPC management. They also have less experience than dedicated people who are strictly focused on PPC. Performance suffers as a result.
- burn out – The more hats employees have to wear, the more likely they are to burn out.
Dedicated in-house talent
This option refers to hiring a full-time specialist who specializes in managing paid media.
advantage:
- All the benefits listed in “Existing Internal Talent”, add:
- Performance – You will get better results when you hire a dedicated specialist because they will have more experience and will be able to focus all their time in the field.
- bandwidth – The bandwidth of this model is superior to existing in-house talent and contractors.
shortcoming:
- Disadvantages listed in the first model (except for burnout), plus:
- Recruitment – Headhunting is challenging, especially in today’s competitive market. It’s time-consuming, and there’s a lot of uncertainty when it comes to onboarding new employees.
- obligation – For salaried employees (compared to project-based employees), you incur high monthly operating costs regardless of the individual workload. Again, you will be covering this cost indefinitely, regardless of their project duration.
- limit – Unless you have $12,000 to $13,000 per month to spend on multiple specialists, you’re going to have to accept someone who handles both paid search and paid social. This leads to a drop in skill compared to a channel-specific specialist focused on one channel.
Hire a Contractor
This method of fulfillment involves independent individuals who do not work exclusively for one person or business.
advantage:
- economy – This is a cost-effective method because 1. you only pay for a specific project (account), and 2. the contractor usually has limited overhead.
- control – While the level of control this model cannot compete with in-house models, there will be more flexibility here than working with an organization.
- flexibility – The contractor has no long-term obligations.
- talent – This economical option allows you to hire channel-specific specialists instead of generalists managing paid search and paid social.
shortcoming:
- risk – There are inherent vulnerabilities in hiring contractors due to the independence of the position.
- lack of trust – This is the other side of the flexibility coin, for example, you have one person serving multiple agencies.
- communicate – Communication gaps are inevitable when one person manages multiple clients (agency), each client (agency) has its own account.
- Accountability – Independent contractors have the least responsibility.
- mediocre – Innovation in this model is uncommon due to the natural limitations of the individual.
- interrupt – As with any interior scene, when the person is there, it’s destructive. Remember, contract work doesn’t come as self-evident as two weeks’ notice.
White Label PPC
With this fulfillment method, your agency buys the services of a white label company and makes them available to your clients under your brand.
advantage:
- cost effective – Hiring an outsourced partner can eliminate payroll and reduce costs associated with recruiting, infrastructure, workspace and resources.
- Performance – A reputable white label PPC supplier will provide the best performance. There are two reasons: 1. Given that they manage a massive ad spend in the millions, they will have a lot of data, automation, etc. 2. They will have channel-specific specialists and paid media generalists.
- Stablize – This is the only model that provides an instant replacement of experts during customer churn. They have other acclimation experts who can step in to minimize the impact of the transition phase.
- low commitment – Like contractors, you don’t need to worry about idle paid employees at the end of a project because you only pay for what works.
- Accountability – White label PPC companies carry their brand and top management, which means that experts are expected to have high standards.
- state of the art – In addition to the experts who manage your account, the white label provider will have leadership dedicated to continuous improvement of their services.
- Turnkey projects – I know a vendor that enables agencies to effectively white-label large-scale PPC management throughout the customer journey through a dynamic interface. If you have multiple accounts, it’s important that the powerful client portal goes beyond simple functions like submitting support tickets.
shortcoming:
- Additional tools – You can’t expect an organization dedicated to white label PPC to integrate with your system. You will need to adapt to other tools.
- minimal control – White label providers have developed their service level agreements. The result is that you cannot decide or modify their process.
- communicate – There is simply no way to replicate the responsiveness of internal staff.
notes: Depending on the vendor you choose, the downside here could easily be longer. I’m assuming the white label provider 1. has full-time W2 staff residing in your country; 2. doesn’t take over ownership of your assets (ad accounts, landing pages, etc.), and 3. has channel-specific experts like Paid Search Specialist and Paid Social Specialist.
Four secrets to success
These are the most common PPC fulfillment options available to agencies.
You need to decide which one will give your agency the most scalability potential.
I offer four tips to help you determine the most effective model for solving the PPC dilemma.
1. Measure your FOP appropriately
The most effective option will be the one that weighs your agency’s most profitable offering.
In other words, when all is said and done, your FOP should be dominated by activities related to your wheelhouse/flagship product.
Consider asking yourself, “Which model minimizes the production factor of PPC fulfillment while still allowing us to profit from its output/deliverable?”
2. Be proactive
Faced with such an opportunity, it is easy to be ruled by imminent tyranny.
Don’t just think about what’s helping you right now; think about your potential 6 to 12 months from now.
To flesh this out, imagine yourself 12 months from now saying, “I wish I had __________,” and then taking steps to avoid this regret.
3. Don’t underestimate PPC
Evaluate many aspects of an organization, but few are as important as PPC.
Consider the number of users on Google and Facebook, the high level of intent associated with PPC, and the unparalleled control over the marketing dollars available to advertisers.
This is not an aspect of digital marketing you want to take lightly.
4. Remember the opportunity cost
Rather than thinking strictly about direct costs, remember to respect and consider opportunity costs when making strategic decisions.
When we emphasize secondary priorities, we miss the opportunity to zero in on the things that help us the most.
This can be likened to the inverse of diminishing returns.
make confident decisions
Jim Collins points out in his book “Good to Great” that you need to face the facts to make the right decisions.
There is no better way to make decisions than based on proven scientific laws.
You can relax and make a call to get the economist back.
If executed correctly, you can look back 12 months later with a strong sense of satisfaction knowing you made a smart move.
Facing your future, sustainable development!
More resources:
Featured image: Golubovy/Shutterstock