How I Would Evaluate A PPC Agency’s Performance If I Were A Client
March 25, 2015
As the CEO of a 45-person company, I obviously can’t make all of the decisions for the company, nor do I want to. I need to be able to rely on our department heads and managers to drive results. So, I would approach managing the agency like I approach managing Hanapin, focusing on results and behaviors.
If Hanapin were to hire a PPC agency, I would not be the person managing them on a day-to-day basis. It would be our Director of Marketing. I would be involved in the final decision to hire the agency and I would meet with the Director of Marketing periodically to discuss high-level stats (results) and make sure that we’re moving in the right direction (behaviors). Here’s how I would think about how to manage that process and the agency.
Determine The Right Overall Strategy for The Account
Do we want to cut wasted spend? Or do we want to grow the account? These are two goals both related to EBITDA (earnings before interest, tax, depreciation, and amortization) and overall profitability but they’re contradictory goals. The former is contraction and the latter is expansion. Many times, an account is not properly optimized, which is why clients often look for an agency, so there are some quick wins the new agency can get. If this is the case for us, I would make sure there are clear expectations for the length of time the agency is planning to stay in contraction mode and cut wasted spend.
Many times, clients want us to cut wasted spend in perpetuity and continually optimize the account, trying to achieve a state of “perfection.” This is impossible since the advertising landscape is always changing. These changes include:
- New advertisers
- New products from those advertisers
- Consumer behavior evolving
- Google and Bing always improving their platforms
My job as CEO is to grow the company. So that’s where my focus would be for PPC as well. As soon as we’re done with contraction, we move quickly into expansion. I would set clear expectations, focusing on year-over-year growth since we’re a mature company. (If you’re a startup, I would focus on reasonable month-to-month growth.) Hanapin has grown double digits 10 of 11 years, so that would be the minimum amount of growth I expect for PPC and I would adjust it using our annual budget to determine how much PPC should be responsible for.
Determine How We Will Measure Growth
The great thing about PPC is there are an infinite number of statistics you can measure. The bad thing about PPC is there are an infinite number of statistics you can measure. So how do you determine the right ones to look at? As CEO, I want to look at high-level metrics to ensure the graph is going up into the right. (I would rely on our Director of Marketing to work with the agency to focus on more detailed metrics, ensuring the right buttons are being pressed and right levers are being pulled, such as impression share, pageviews per visit, etc.) I would focus on total overall leads and total qualified leads, while keeping an eye on total traffic.
The reason I would look at leads I think is obvious. I want to make sure that my website or my landing pages are converting traffic into prospects. Even if they’re not all qualified, I care about the overall leads because it indicates whether we should be on track to generate the right number of qualified leads. As long as they complete a contact form or chat, we count them as a lead.
I’d look at our qualified leads to determine whether or not those prospects are good fits for our company, looking at their budgets, whether they’re in an industry we service, whether they have a pain point we can help solve, et. al. For us, a qualified lead is both budget and sales qualified. They have the budget to hire an agency and it’s large enough to generate a good ROI for them (e.g. someone with a $1,000/mo budget would get great results but the ROI from paying our management fee would make it moot to continue) and they want to engage an agency and aren’t simply exploring options on how to manage their PPC.
I’d also look at overall traffic to make sure that were continually filling the top of the funnel with prospects (i.e. not leads) so they’re aware of the company even if they don’t want to engage an agency now. Our buying cycle can be fairly long, and the decision to hire an agency, particularly if you have a large budget, is a considered one so making sure we stay top of mind in front of the right prospects is important to the long-term growth of the company.
Finally, I’d look at stats to determine the amount of revenue we’re generating, including:
- Number of clients
- Size of contracts
- Length of contracts
However, I wouldn’t hold the agency accountable for those things. The reason is that they only have influence over them. Our sales team controls the outcome. By looking at these stats, it gives me a good idea of whether or not our PPC agency is moving in the right direction. It wouldn’t tell me whether or not the engagement is a success and whether we retain them further, simply because they influence sales but can’t close them for us.
Determine What A Homerun Looks Like
One of the best ways to set expectations and communicate what success looks like is to fast-forward a year into the future and ask yourself, “This engagement was an absolute homerun, and I know this because…” and then fill in the blanks. It’s a good exercise to predetermine what success looks like so you’re actually managing to that vision and communicating it upfront versus looking back on the engagement and looking for signs of whether what happened was acceptable or not. If it was, great! If it wasn’t, you’ve essentially wasted all that time. For us, a homerun would involve these four aspects.
- Hitting PPC growth goals
- Hitting PPC sales goals – as it relates to PPC leads, not overall company sales goals
- One of the clients that we’ve closed is a fairly large one, north of $1mm annual budget
- And the PPC agency is exhibiting the right behaviors
How To Determine If The PPC Agency is Exhibiting The Right Behaviors
If the PPC agency is hitting results, then the right behaviors are less important as results are ultimately what matters. If they’re not hitting results, then the right behaviors are extremely important because they tell us whether or not we’re moving in the right direction. They give us an idea of whether or not we’re likely to even hit the goals. Even the best agencies (you can substitute “employees” here also) will at some point not hit goals, so it’s important to figure out how to measure their performance in those cases. For me, it’s not a binary situation where if they don’t hit goals, we need to find someone new. We need to work with them to make sure that we eventually achieve the right results but need to see some evidence, i.e. behaviors, in the meantime. It takes a lot of time to find a new vendor and there are both hard and soft switching costs, so working with our vendors first is always in our best interests.
The things I would look for, or rather the questions I would ask our Director of Marketing to make sure he/she knew the answers, would be:
- How quickly are they getting back to us on general customer service issues, delivery of reports, meetings, etc.?
- How much of the strategy are they driving and how much do we have to push or pull them?
- When we give them direction are they doing those things? Are they doing them perfectly? If not, is there some miscommunication? Did they hear part of what we’re saying but not all of it? Did they implement some things but not others? Did they implement but not exactly in the way that they would think we would?
- Are they taking initiative? In addition to simply following our direction, are they doing things that we don’t know need to be done? Are they bringing ideas to us, are they “looking around corners” for us?
If the agency is good about customer service, if they’re driving the strategy, if they’re taking our direction, and if they’re taking initiative, then I can temporarily forgive a lack of results. Even the best agencies (or employees) will not be able to perform to goal 100% of the time. Of course, if they are performing, it’s easier to overlook the behaviors if they’re not hitting them 100% of the time, but ultimately the right behaviors leads to the right results so the behaviors are still important, just not the focus.
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