The State of PPC Agencies in 2023

Episode Description

Listen to Frederick Vallaeys, the Co-founder and CEO of Optmyzr chat with Kirk Williams, Founder of ZATO Marketing, and Gil Gildner, Co-Founder of Discosloth about the state of PPC agencies in the middle of an economic slowdown.

Resources

• Check out PPC Ponderings Podcast: https://open.spotify.com/show/2VFMYr19mItE7Nfe4AvDzh
• Check out Kirk’s book: https://www.amazon.com/Stop-Scale-Building-Digital-Actually/dp/B09Z9QZWYL/
• Check out Gil’s book: https://www.amazon.com/Building-Successful-Micro-Agency-Profitable-Sustainable/dp/1733794840

Episode Takeaways

1. Economic Impact on PPC

• Despite economic downturns, small to mid-sized clients remain relatively stable.
• Increased focus on efficiency and profitability in advertising spending.

2. Agency Pricing Models and Client Retention

• Agencies adapt pricing models, like tiered flat fees, to accommodate changes in client spending.
• Emphasis on retaining clients during economic downturns by adjusting fees to maintain long-term relationships.

3. Building Relationships with Clients

• Importance of establishing trust and personal connections with clients.
• Strong client relationships help navigate economic challenges and ensure clear communication during campaign adjustments.

Episode Transcript

Frederick Vallaeys: Hey, I’m Fred Vallaeys. I’m here with two great PPC experts. They’re in town. And they decided to stop by the Optmyzr office. So we got Gil Gildner, Kirk Williams. Howdy. Howdy. Thanks for coming by. Yeah. Good to see you again. I think one of the things people probably want to hear about, how’s the economy impacting things?

Gil Gildner: For us, I think I actually expected there’d be a bigger downturn. Like I was pretty paranoid, honestly, going like, especially last year. I was like, Oh, we’re going to lose everything. I don’t even know why it’s been trucking along. And I think some of that has to do with just where we are in the broader market.

We work with. Maybe not the tiniest, but small to mid sized clients, and we’re pretty picky about the folks we work with, and they’re all pretty healthy.

Frederick Vallaeys: So are you basically telling me that I should ask you advice about picking stocks? You can tell him. No, it was entirely accident on my part. Like, I just happened to

Gil Gildner: It happens to be okay,

Frederick Vallaeys: but But I think there’s something to that, right?

Like, we’re seeing a lot of the big companies doing layoffs and really cutting back, and It’s not necessarily that they’re becoming unprofitable, but they’re just taking this opportunity to scale back from the craziness that we’ve seen. But then the small and midsize business seems to be, you know, taking an opportunity to actually grow.

Kirk Williams: And some of that, we have probably very similar client makeup. Some of that might also be. As brands are actually becoming a little bit more obsessed with efficiency and profitability. I think that their desire to make sure that their marketing dollars are being spent very wisely and well I think there’s been like an increase of focus on that.

And so You know, I think probably for where we’re at, we both have, you know, fairly small teams. We have various, like we have a few number of accounts per account manager. We try to, we try to do Google ads. Well, right. I think that that has a draw to clients that maybe are rethinking their current mix, thinking maybe there’s someone out there who can do a better job.

Frederick Vallaeys: And the money’s not as free flowing as it once was. Yeah. So now, some advertisers are spending less money. But they still want to advertise, obviously, right? So they want to grow. And how does that fit into your pricing model? And I know you don’t do percent of spend. Do you do percent of spend? No. Right.

So, but as these budgets become smaller and the agency portion of the management fee becomes higher, has that been a concern? And how would you address that to someone who’s thinking about going with an agency?

Gil Gildner: We kind of have a, we do a flat fee kind of retainer model, but it is typically structured in a kind of a tier section.

So if someone drops down in a tier, you know, maybe they’re spending 40, 000 and they start, they go down to 30, 000. We’ll drop our fee. For that. Mm-Hmm, . But

Frederick Vallaeys: is it actually less work that you’re doing then, or is it just Not

Gil Gildner: really, to be honest. Okay. But, you know, I, I want to keep working with a client. I would rather them pay me.

You know, a little bit less for much longer than, you know, I think short term and get it all. So you’re basically

Frederick Vallaeys: seeing this as like, maybe they’re going through some tougher times as well. So let’s just retain them. And then,

Gil Gildner: yeah, it’s much to me, it’s much more important to retain someone longer time, make sure everything’s profitable for them.

Hopefully in the future, if we get them through this, they’ll double their spent and. Retainer doubles too. You know,

Frederick Vallaeys: is that an easy conversation? So I’m sure going to them and saying, Hey, we’re gonna drop your , that’s, that’s a very easy

Gil Gildner: conversation. very easy. Exactly.

Frederick Vallaeys: What about the other one? Like, Hey, you just doubled spend via, because with doubling of spend, there are more resources you need to put on it.

So how do you have that conversation? Yeah,

Gil Gildner: that’s, they, they expect that they, they know that we’re going to increase our fees as they go up. Like the way we kind of have our, our tiers structured as long as they’re still profitable, which. You know, usually they are, if they’re sticking with us and that campaigns are going well, it’s, it’s not too bad.

It’s just. Yeah, it’s more. I mean, we,

Kirk Williams: we do find that an increase, like a dramatic increase in spend really does often come with a, with a scope in place as well. Right. So it, there’s still, there’s, there is a value based aspect to the pricing, but I do think, You know, whatever it is, if they, if they were spending 50, 000 and now they’re spending a hundred thousand, unless it’s a very high CPC client.

So there’s not that much data that’s changed. If, if they’re getting like double the traffic, double the conversions, like double everything, that is actually more work that we’re, we’re needing to devote more resources, maybe software gets more expensive. Like all that stuff does to me is, is part of that.

But we have, we have minimums as well on the bottom side too. So like, there is a point where we’re just like. Look, this is how much we, we need in order to be profitable. And that you at least need this in order to do the quality of work we want to do. And that doesn’t always make sense for everyone, which is, which is totally fair.

Frederick Vallaeys: Yep. What about being friends with your clients? I feel that’s a, that’s a thing for you, right?

Gil Gildner: Actually came about via laziness for me, because. I just like to work with people I like, so it’s just makes everything easier if they trust me and I trust them. I don’t start out friends with all my clients, but I have ended up being friends with quite a few of them.

Even after we haven’t worked with them for a while, I have, I have buddies I email with from years ago that were originally are. Our clients so nice.

Frederick Vallaeys: And that makes every conversation that much easier it does

Gil Gildner: I think it’s honestly because it’s also cultural because i’m from the south and we just Everybody’s like a good old boy with their buddies.

So it’s kind of the same thing except we’re not in pickups driving around Just like you’re an artist. All right. Yes So I I enjoy I enjoy like working with people I like on a personal basis and Fortunately, we’re lucky enough to be able Be picky in that regard.

Kirk Williams: Well, it’s a trust thing too. Like we’ve talked about this a lot on this little trip which this originally started because you don’t hear a conference supposed to happen.

And we were like, I don’t know, like I had already bought tickets, plane tickets. I was like, what if we go somewhere and hang out, hang out with Fred? So I’m so glad it worked. And so we’ve chatted a lot about this and, you know, To me, that’s especially like small agency ownership like us. There’s just, there’s two like such crucial aspects of that.

And there really is the performance aspect where you do have to do well for your client account. You know, at some point, like they’re, you know, they’ll, they’ll probably fire you if you’re not getting the results that you’ve gotten. And that’s a core part of that. But also there’s like the relational side that’s really important.

Like there is a trust aspect. To that to me, especially is important and helpful as you build those relationships. Because what happens when, you know, times like this, where there’s like economic uncertainty, what helps when they know that you can give them the results, but now there’s a struggle. And then when we’re telling them, Hey, this is because X, Y, Z changed in, you know, the space or whatever it might be, supply chain issues or things like that.

They know that we’re not just like, I know that we’re not just like making up something to save our own hides. Like we have that relationship. We’ve established that rapport and it just, it just makes for an actual healthy relationship because then you can actually solve the problem that is occurring and the problem isn’t just like us defending our agency management or, or, or button pushing in the account.

We can actually like focus on what is the problem and like, how do we solve for that? And I just feel like that’s such a healthier relationship to have with your clients.

Frederick Vallaeys: You spend a lot of time talking to new people in the industry. One of the recent episodes you did on your podcast was about just like having a good relationship and Everyone being on the same page, and that was a Google episode.

So so definitely to tell people about your podcast and where they can stay in touch with you. Yeah,

Kirk Williams: we just started season two of the PPC Ponderings podcast. And that is, the goal is to just find people who aren’t on the speaking circuit, just who, Are like really doing a great job with Google ads that like, none of us have ever heard of.

And so that first one was kind of a Google rep that we had stumbled upon. And so, yeah, PVC boundaries podcast. And then and then I wrote a book on agency stuff. That’s, we both wrote a book on agency stuff. Mine is stop the scale, just trying to, you know, understand the idea of what if like pursuing health and growth in a, in a, in an agency doesn’t mean you have to endlessly chase some like revenue goal or employee goal.

But just focus more on like profitability, contentment, you know, work life balance, that sort

Frederick Vallaeys: of

Kirk Williams: thing. So.

Frederick Vallaeys: That’s great stuff. Gil, what about you? You got some books there? Yeah,

Gil Gildner: I do have a book and it has a more creative name than his. It’s just Building a Successful Microagency. So I really pulled out the creativity. That

Frederick Vallaeys: was before GPT 4 could help you, right? Yeah, I was stumped. And I was just like,

Gil Gildner: ah, I don’t know. Yeah, it came out pretty easy, so. But nobody’s surprised

Frederick Vallaeys: about what the book’s about, though. People see the paper and it’s like, what is it, what is it? Yeah, they think it’s fiction.

Gil Gildner: They’re like, I thought this was a novel, and then they’re very disappointed. Yeah.

Frederick Vallaeys: Well, we’ll put the link in the bottom, so check it out. Okay, thanks for coming to the studio. Yeah, always a pleasure.