What ‘Budget’ Means in PPC & Why You Should Divulge It to Prospective Agencies
June 18, 2014
In certain circles it can be considered rude to talk about money. It may not even matter the circle; there are plenty of circumstances where it’s either awkward or impolite to bring up matters of the all-mighty dollar no matter who you’re speaking with.
Your paid search agency partnership is not one of those circles or circumstances. There. I said it! Don’t worry, I’m going to tell you why, but first we need to unpack how this delicate conversation tends to get started
One of the preliminary questions we ask prospective clients is to share their approximate monthly ad spend. About half the time the response is: “Why do you need to know my budget?”
This brings me to my first point – paid search is not quite the same as other (maybe more traditional) marketing channels when it comes to budget terminology. If you’re working with the guys over at Sterling Cooper & Partners, odds are that the budget you report includes the monetary funds to pay the agency and to make the marketing happen. With PPC, your ad spend refers to the dollars going directly to clicks and/or placements within your paid channels – no agency or other fees factored in. Typically, and this is the case when our team asks the question, budget = ad spend, not what you’re willing to pay an agency to manage that ad spend.
If I were the prospect I would ask for clarification on what the agency is looking for. If the agency is requesting your ad spend when they say budget, you should at minimum be ready to talk in ballpark terms in order to line up possible solutions the agency can offer (more on this in a second). If they’re asking for what budget you have for agency fees, then I tend to agree that the request for information may not have the best intentions. At this stage, the agency shouldn’t be focused on what your management fee invoice total might be. Rather, what the scope of spend is and again, which of their potential solutions might fit best.
Now that I’ve made two soft mentions of aligning agency solutions with ad spend (read: budget), I think it’s about time to explore that portion of the engagement conversation.
You’ll be hard pressed to find a paid search or digital agency that offers a ‘one size fits all’ solution for clients. Most offer a few different options, which could include but are probably not limited to:
- Enterprise-level full time management
- Small business-level full time management
- Hourly retainers
- Comprehensive one-time audits
- On-going hourly retainers
- Technology/platform-based management
- Hybrid of any of the above
It is a true privilege to be part of an agency that is flexible enough to provide solutions to accounts of all shapes and sizes, but it can make selection difficult with a fuzzy budget understanding.
Comprehensive audits are generally completed by 3-4 team members and culminate in presentations of 100+ PowerPoint slides with task or opportunity lists that can keep in-house teams busy for 6 months or more. An account spending $20k/month across all PPC channels with the CMO managing probably won’t benefit much from a laundry list of to do’s that they don’t have time to implement. If we know the budget going in to that discussion, we can talk through the value of full time management on a Small Business package for a fraction of the monthly cost of an audit. That solution actually gets the work completed by our team rather than further loading up the CMO’s plate with things they can’t finish.
Did you catch that small detail in there – the part about Small Business management being a fraction of the monthly cost of a one-time audit? That’s another thing to keep in mind; the right agency’s main goal will be to find the solution that is best for your accounts, not necessarily the one with the highest ticket price. That same agency will make it their priority to reduce wasted spend and reallocate to already profitable or new paid search campaigns. At the same time they’ll be looking for opportunities to expand budget where return is high in order to further saturate your market.
Spending the budget no matter what is not the goal for your paid search agency. Spending as much budget as possible under accepted and agreed upon ROAS or ROI numbers is the goal.
Keeping along that same train of thought, budget is going to be a topic of discussion monthly (in most all situations) with your agency account team…so why wouldn’t you get a practice run out of how the prospective agency handles that conversation? When you divulge budget, do they ask further qualifying questions about how that’s split among different engines? Do they inquire about whether that budget is predetermined per-quarter or monthly? Have they requested the goals that dictate budget, if it’s permitted to fluctuate? An agency that asks for budget and then moves to a different topic is probably misaligned for the long-term. Where as an agency that digs deeper in to that budget, what it means, how it’s determined, and how they can better manage it according to your business needs is looking out for your bottom line and how to improve what that budget gets you.
I can speak with complete confidence when I say that, especially in the paid search marketing industry, discussing budgets on the front end is beneficial for everyone. Being on the agency side, I know there are few things more deflating than realizing a possible client conversation has gone down the wrong solutions path and needs to shift gears – mostly because you feel as if you’ve wasted the prospect’s time and you know going in how valuable that time is or they wouldn’t be talking to you in the first place.
The right agency will ask the right questions around this subject, but if you want to find the right agency you’ll have to give a little, too. Consider what pieces you can put in play to help keep all sides confident that no secrets will be spilled. Use an NDA if that’s what it takes, but have as direct a conversation as possible, as early as possible. When it comes to PPC budget make sure you’re having the best-fit discussion for your needs.
To our agency friends – how do you poise the budget question to make sure you’re helping prospects choose the best solution? For those readers in charge of selecting agencies when the time comes – what are some good, bad and ugly budget conversations you’ve had and how could they have been better (if they weren’t positive)? Share with us in the comments section below!
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