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PART 1 - Paradigm Shifting as Companies Grow: Commandos, Infantrymen, and Policemen
Let me drive quarter over quarter and year or year growth and I’m psyched; in marketing, since you are only as good as your last quarter anyway, this mindset has served me well.
I thought transitioning to a smaller company than Audible and LowerMyBills.com would be fun, smooth and simple. I figured I know how to open up channels and grow them, how hard can this be?
But, it took a paradigm shift in how I approach decisions to make this change and given that I need to build a team at the same time, this was trickier than I thought. It was challenging because companies have three phases and staffers need to work within a different paradigm for those three phases. Riya needs commandos, Audible needed infantrymen, and LowerMyBills.com (owned by Experian) needed policemen. In order to make the transition, I needed to embrace my inter-commando, but did not know it. Munjal Shah, my CEO outlines these concepts well in his blog from last week.
It’s been a while since I wrote a pretty personal blog anchored in business concepts and paradigms but after the last 6 weeks, I thought I might talk a bit about the transition from a policeman to a commando. It’s two parts just because it’s a little long. Let’s get started.
Stuck in an Old Paradigm
I’ve worked at the tactical level for every online acquisition channel including affiliates, email, paid media, even coordinated campaign management, not but search; however, I have I managed search as a director at the strategic level, but never got my hands dirty with it.
When I got to Riya I realized that search was important and we needed to win at the search game which to me means the need for a serious bid management tool. Do we hire someone and built it in house like QuinStreet and NexTag or do we use an agency? And I spun through all the possible options for a week. During this time, I kept thinking, if I had only been a search manager at one point, I just don’t know enough about the channel tactically to make the right decision. I kept thinking about LowerMyBills.com and what the terrific online marketers would do there.
Then, Brian Caldwell introduced to Zak Asani from The Found Agency and he wrote me a great email that I’m sharing in full because I think it’s a good way to look at the challenge of the search channel from the advertiser point of view. And as a note, Zak was not after my business and he made that clear, he was just trying to provide me a framework to make a deciscion. Zak wrote:
Hi Beth,
As discussed with Brian last Friday I think it is worth you considering the agency option with regards to managing your ppc.
There is such a shortage of qualified PPC people at the moment, which means that the salaries these people are asking has gone through the roof. Even if you can find a good PPC person keeping them will be a challenge as sooner or later a better offer will come along.
The other factor to consider is that there is a lot of boring and tedious things that need to be done on a PPC account which can be done by nearly anyone. For example I have staff working here who’s job it is to go through PPC campaigns removing the least performing ads. Someone else will then add new ads to the campaign. Removing the ads could be done by a 10 year old it’s that easy. One just has to be able to look at ads all day every day. For this kind of role we pay slightly over the Australian minimum salary.
If you hire a good PPC person, you’ll probably have to pay US $100k+ (I’m guessing as I haven’t hired any US based PPC staff). Do you want to pay someone $100k+ who then will have to spend 70% of their time doing work that you could get someone to do for a fraction of that cost.
If your campaign is large enough hiring your own staff may be worthwhile, but this will still depend on how good the agency is, and how good the person you hire is. What I mean by that is…let’s assume you hire a person at $100k, and that you have an annual PPC budget of $1 million. Working full time the staffer gets your CPC (or CPA) down to $0.30. The number of clicks delivered over a year would be $1M - $100K = $900k. Clicks = 900k/0.30 = 3,000,000
Now lets assume an agency was to manage this campaign and they charge 20% of spend, but they are able to get the cpc down to $0.25. Spend = $835k ($835k + 20 % = $1M). Clicks = 835/0.25 = 3,340,000
So based on the above example you would be better off going with an agency if they could get your CPC down to $0.25 compared to the $0.30 of the staffer.
I’m certainly not saying that all agencies will get a lower CPC than a full time employee, as there are many agencies that are pretty useless at managing PPC campaigns. But if the agency is good they will most certainly be able to get a lower CPC than one full time person working on a campaign. If this is the case, and if the budget is large enough, then it makes sense to go with whoever can get you the lowest CPC.
Sorry to have rambled on. Give me a buzz if you want to discuss this over the phone.
All the best,
Zak
Now I have inherited poor search agencies and I tend to think agencies (for anything) are generally better than weak staff but not as good as very strong staff; however, in this case between the need for a strong PPC bid management engine and this email from Zak. I thought I found the answer. And since search is my weakest channel, I though solved this issue.
I sent Zak’s email off to my CEO, Munjal Shah and got an email back saying lets meet tomorrow. I thought I just impressed him, it was a new job, I was feeling pretty good. I enjoyed that feeling for about 8 hours until I sat down with my CEO the next morning.
It turns out, I swung hard at the ball and missed.
(Part Two continues the story)
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