Do you spend too much on Ads?

by Jim July 10, 2020

Ads management fees vary between agencies. Many still charge their clients based on an antiquated newspaper method of charging more fees the more the client spends. That makes no sense to me. The aim should be to reduce the client’s spend and make them more money, all for a flat fee. How do you do it?

What I learned

  • Do you spend more to make more?
  • Why clipping the ticket is outdated.
  • Our flat fee system.
  • Don’t waste money on a small audience.

Transcript

Hey, welcome back Rankers. How you going? I was talking to a client during the week who we don’t do their ads and he was telling me how they pay for their ads, and they pay for their ads management based on how much they spend each month with Google. And I said, “Really?” I said, “I didn’t think people did that.” And I said, “Because when I first looked at this back in 2004 or whatever and how we were going to charge for it, it was about, oh, you can’t charge the same way as you do in the offline world,” which was back in the day in newspapers. What used to happen is, is that you used to get charged a management fee based on how much you’re spending. And that was the standard model and many, many companies made a lot of money doing that.

Clipping the ticket

In fact, one of Australia’s biggest media buyers was a place called Mitchell’s, and that’s how they made their money, was basically clipping a ticket, is what we used to say, on the way through on the transaction going into the newspaper or wherever it was. So with Google Ads, that didn’t make sense to me because I control as the person who’s buying the media space. I also control the words, the copy, as you would in a newspaper. But I also control who to target. Now, as a media buyer, you don’t do that in a newspaper, right? You can choose which newspaper to go in. But with Google Ads, you’re targeting the user type, the device they’re on. You’re targeting, certainly, the geographic location, but also the demographic as well, which you cannot do in newspapers. So to simply clip the ticket on the way through, it certainly didn’t make sense for me because that would incentivize waste in my opinion, because all I’d be trying to do would be to increase the spend of the client so I make more money.

So it didn’t make sense for me to do that, and I actually didn’t think I’d be able to sell it to clients. So what we do is we are actively looking at making the ads make more money. And our ads, the way that we cost out ads management fee, it’s a flat fee. It’s not based on how much you spend. Regardless of how much you spend, I’m not going to charge you more. It’s about the effort and the work that goes into your campaign. So just because you add more budget doesn’t mean that you should be getting, well, in my opinion, getting charged more management fees, and this is a case in point. So you can see here, and this is the same client who we put the three words for the USP on the homepage and in other prominent areas on the site. And as soon as we did that, the search traffic revenue doubled overnight. That’s this client. So that happened on the 17th of June. So we’ve got that window.

Spend less. Make more

We haven’t quite got 30 days yet, but the goal of this client was to get the return on the ad spend to 1000%. Because when we took over the ad spend, she was getting about 200-250% return. And as you can see there, it was a significant ad spend. I think she was doing up around 40 grand a month back in April. Yeah, about April. So what we did is we looked at how do we first get this spend down? So we basically just found that there were a lot of problems with the way that they were calculating conversions and those sorts of things and a lot of mess in the Google Ads back end. So what we did, we went and cleaned all that up gradually, and then also working on the UX issues and some of the SEO issues, those sorts of things. And then the spend comes right down, and you can see there, since then, she’s spent about $2,000 less. So 31% down in ad spend and made an extra $24,000. So nearly doubled.

Jim’s been here for a while, you know who he is.

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