Fanatically Digital

Category: Agency Management

  • Evolution of a PPC Agency

    Evolution of a PPC Agency

    There is a lot of talk about artificial intelligence in digital marketing and its impact on us as an agency, specifically in PPC advertising. For over twenty years, I have seen a lot of changes in the search engines.  We’ve gone from managing the minutia to strategizing with AI.

    Some of the changes in the PPC world and where it lands us as a PPC agency:

    The Search Engine Competitors

    In the early years, the change was about the players. As the different search engines competed for PPC marketing dollars, the number of paid search engine options faded over time. Yahoo! and Ask had dedicated sales teams, then eventually stopped selling and simply incorporated competing search engines into their search tools. Google and Microsoft are the last two (viable) PPC search engines. 

    Through all this time, Google set the standards that the others tried to emulate. From consumer-facing features to ad management UI, most tried to copy Google. We are at a point where Microsoft simply says to import your Google Ads or Google Merchant data directly. 

    As an agency, it is easier to deal with a few players, but it seems restrictive in the search space.

    Google Ads: From complete control to black-box

    Focusing on Google which set the stage for all search engines, Google tried to provide the PPC managers as much information and control as possible. The search management landscape is unrecognizable in today’s environment. Take these examples:

    Long-Tail Search Term

    When Google reps visited our agency, one of the first strategies they encouraged was an exceptionally well-built-out keyword list with well-structured ad groups. Having five- or more-word search term targets was very common. Creating ad groups focused on very finite terms created a competitive advantage. 

    You could find terms on which very few competitors were bidding, thus creating very low-cost CPC programs. While everyone was bidding on head terms, only those who did a great deal of work built out long-tail programs. 

    Google effectively killed long-tail PPC programs by implementing “low volume” barriers to creating a search auction. Now, Google has forced us to compete with head terms (or very close), inflating the cost for any advertiser who managed long-tail terms.

    SKAG – Single Keyword Ad Group

    One strategy implemented by many PPC agencies and managers is the SKAG. It was very targeted, with very tight ad copy and landing pages. Running the SKAG was a lot of work, as was managing the ad groups and the negative match type to funnel the correct ad to the best search.

    Google effectively killed this strategy by no longer honoring match types. When your ad group ad can show for searches that Google deems “mean the same” and seems to grow the list of “qualifying searches” as you increase your negative keyword list, the SKAG loses its validity.

    CPC Max Bid – still available, lease valuable

    From Enhanced bidding to CPA to ROAS, CPC Max Bid has all but lost its meaning. You can absolutely do this. But, with the advent of AI, manual bidding is highly inefficient and perhaps even detrimental to a PPC ad program’s success. 

    With the advent of PMax campaigns and CPA/ROAS targeting, the CPC quickly becomes irrelevant. This is where AI is making itself felt.

    What Does AI Mean for a PPC Agency?

    For any agency or in-house PPC manager, the direction of Google Ads will greatly reduce the time spent on tactical implementation and increase the focus on strategy. 

    This is a difficult switch for larger agencies or any PPC agency that built a team dedicated to managing the tactical implementation of paid search, which almost all have. I have seen recent PPC agency recommendations that make it clear that the agency is still clinging to the old tactics (old being just a couple of years). To shift from tactics to strategy, agencies have to reduce staff at the lower to mid levels and hire/promote staff at upper-mid levels to work with clients.

    It makes managing the client relationship more challenging on two fronts. 

    One is that helping clients transition from the tactically focused account structure to a more strategic/AI-centric approach is difficult. Clients are used to seeing very detailed campaign builds and reporting. As one agency put it, manually managing the program gives you more control… but not better results. Clients feel better with the control. As an agency, we have to help them look past the lack of direct control and see the results.

    Two, fee structures are based on the old paradigm. With hours baked into tactical actions that are no longer needed, agencies must reevaluate their fees with current and new clients. These hours and the agency’s profit based on them are going away. It can be challenging to take steps to reduce the agency billings. It’s a bit frightening to give up the revenue, and let’s face it, a bit of an ego hit. But our industry is changing, and we need to adapt and be fair.

    The pace of change in the pay-per-click industry is accelerating. Agencies should be leading their clients down this path with a result-centric, strategic approach. Waiting until you have no choice when Google and other channels force the use of their AI, will leave the agency and the clients behind.

  • Avoiding Agency Churn

    There are many challenges to achieving a client’s goals. Often these challenges can be worked through by the agency and client. Identifying possible roadblocks prior to signing a contract will help ease the navigation through the initial months of the relationship. One sign of possible difficulty is a history of successive agencies for the client.

    The issue of Successive Agencies

    Sometimes, it is simply a difference in culture or way of working. To avoid this, we dive into how the client likes to work internally as well as with vendors. If these align with our own culture and method, it may be a good fit. If not, we will walk away from the opportunity.

    When the succession of agencies is attributed to a “lack of performance,” red flags are raised. 

    While some agencies may struggle for results, most are decent. Sometimes the lack of results comes from the different working styles; this is fixable. More often, it results from an inaccurate assessment of the market, the client’s unrealistic view of their position, or restrictions the agency chooses to ignore in order to obtain the business. An agency can’t fix this set of issues, and ignoring them hurts the client.

    Ignoring the realities

    Both clients and agencies may wear rose-colored glasses. They tend to believe their own hype, ignoring their competition’s strength, the market’s complexity, or barriers to their goals. 

    On the client side, we may hear things like:

    “We are well known in the market.” Too often, particularly in fragmented markets, clients overestimate their brand awareness.

    “We have special relationships with the manufacturer.” Very infrequently, a retailer’s pull with a manufacturer will be greater than that of other retailers. As a result, clients may believe things like “we get the best pricing,” “we get access to more inventory,” or “we have access to more SKUs.” They believe they have an advantage that should naturally generate better sales. After working with the client and gaining experience in the vertical, it is apparent that the client does not have the advantages they believe they have.

    On the agency side, the responses involve overconfidence in overcoming  (or ignoring) what blocked prior agencies. The agency will take it if the client is willing to shift the business. While this will boost the agency revenue, it is a disservice to the client. Agencies selling to clients should highlight the issues even at the risk of not ‘winning’ the sale.

    Avoiding the churn

    The responsibility of making a good partnership rests with the client and the agency alike. It starts with reciprocal honesty. 

    What can agencies do, and what should clients expect?

    Set realistic expectations. 

    One of our first steps in working with a prospective client is developing a model for conversion based on expected costs, impressions, CTRs, and conversion rates. This provides an average cost for leads or sales (with est revenue depending on the client.) Are these numbers acceptable to the client? If so, what is necessary to achieve them?

    The first filter (are the numbers acceptable?) is a quick way to understand the client’s expectations. It is possible that prior agencies achieved these numbers, but the clients wanted lower costs per lead or sale. Sometimes, you get vague directions just to have a lower cost. Either way, having this ironed out before an engagement avoids issues later.

    If the numbers are unacceptable, it is better to be open about it. 

    The second filter is critical in understanding how far the client will let you go to achieve results. It is often only after making recommendations that clients may object to the agency’s directions. Inquiring about the activities and recommendations of past agencies provides a sense of what will be acceptable. We will also provide broad recommendations to see if our strategy is acceptable. When there are too many unaccepted recommendations, it is difficult to achieve the goals.

    For instance, we had a prospect that wanted an SEO program (and were paying an agency for SEO) who would not allow any changes to their website. The site needs many changes to be even remotely ready for a decent SEO program. While we could have continued to try to get the business, we would have done no better than the current agency. We informed the prospect of the barrier, were thanked for our candor and went our separate ways.

    What can prospective clients do?

    Be candid with expectations, history, and unknowns. Agencies rely on the information to make recommendations. Some information comes from research, and much comes from clients. If a skewed view shades the information from the client, then the agency recommendations will be off the mark. 

    A review of past agency interactions can be helpful if a company has seen a succession of unsuccessful agency partnerships. How many recommendations were made but unaccepted? Has performance been consistent over the agencies (though below desired targets)? Were there consistent meetings? These are generally easy questions.

    Was the information provided to the agency accurate? This may be more difficult to determine because it requires companies to question their own stories. Challenging preconceived notions about the market position, product quality, and vendor relationships is hard when the company leaders are the source of information.

    Long-term partnerships

    Longer-term client/agency relationships are rewarding for both. Well-performing digital marketing performance for the client and steady revenue for the agency are, of course, important. But good relationships go beyond the monetary aspects. Ensuring the cultures mesh, communication is strong, and that there is mutual respect helps the relationship through the inevitable ups and downs encountered in business. These things start with open and honest conversations.