Subline Performance Marketing Podcast Episode 1: Know when to say no

Subline Performance Marketing Podcast Episode 1: Know when to say no.

If you run an agency, let me ask you a simple question, how many deals have you walked away from in the last 12 months? Because if you haven't, and procurement has said you'll match this price and you'll get the deal, then the chances are that you're gonna be looking at a PPC side to your business that isn't producing the profit that it should. That doesn't do justice to the industry at all.

We end up with agencies struggling thinking that they don't have the expertise, they don't have the staff, they don't have the right tools, they don't have the right tech, when a little bit of time, actually what's holding them back, is bad deals in the wrong structure.

If you're a big media agency, and you're pitching for consolidated accounts, absolutely, you're gonna find yourself in trouble when it comes to PPC. Because, unlike traditional media, like TV and radio, that derived value through the buying, PPC derives its value through its activation.

So, unless you can find a way of activating that effectively, you're gonna have an unhappy client. You're gonna have unhappy staff. You're gonna have people working long hours, you're going to have high staff turnover, and you're probably going to lose the account at some point, because a specialist is going to come along and say, "You know what? Are you not tired of cheap? Why not go for good instead?" That's what happens.

I think sometimes we do get caught up in the desperation of winning new business and growing, that we forget that in actual fact, part of growing sometimes is saying "no." I think with so many procurement-led pitches where fees are squeezed until you end up with a sheet of 20 people with 5% each. Which is just crazy. You'd have to be absolutely, ridiculously stupid to think that 5% of 20 people is gonna deliver you top class PPC. It maybe will, if you've only got a handful of keywords and you're not eCommerce enabled, and all you're doing is looking for some brand coverage, because that's not that difficult. It's not a complex account. Especially if the spend is quite low, and you're not looking at anything in different geographic regions, or different search engines.

But, if you have anything that's anywhere near a complex search account, especially if you're eCommerce enabled and you've got lots of SKUs and you're trying to promote across different search engines, in different languages, in different countries, then cheap isn't going to work. It really isn't.

The amount of times I hear people say, "Oh, you know, our PPC division isn't profitable." It's unbelievable. It comes down to signing bad deals and having a structure that just doesn't work.

Somehow or other, the big media agencies have to find a way of fitting PPC in as an activation service at a different fee level than they're doing everything else, and at a fee level that gives them the right amount of people to actually perform that account effectively.

Making profit, a lot of the time, is just about adding up, isn't it? You take your variable costs, and your fixed costs, and add in your profit and that's it. You get 100%. In our industry it's been widely know, for as long as I can remember, decades, that 40% fixed cost, 40% variable cost, 20% profit. That's what you should be aiming for as an absolute minimum.

Yet, if you look at a report in Campaign magazine, (https://www.campaignlive.co.uk/article/ad-agency-makes-money/1519713), it shows the average profit of media agency at 12.5%. I think that's unbelievably low. If you look at some of the profit coming out of, I think they've got Fallon in there, over 30%. And if you look at the specialists, they'll be somewhere in the middle.

So, it is possible to do it, but you have to be able to, number one,