A COO’s Perspective On ROI, Wild Profitability, Tech Implementation And Where It Goes Wrong

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by Leah Bond

March 2, 2021

Some of you are reading this because you already have PPC Samurai implemented in your agency. Some will be reading this via our newsletter or Medium. Some will just be Facebook friends with my mum (sorry 💁🏻‍♀️), but on the whole I can’t imagine you showing up to this article if you weren’t already using or interested in using automation adtech like PPC Samurai. So if you’re in charge of Paid Search, or you’re heading operations for your agency, we need to talk about ROI, what you need to consider as you pilot a platform like PPC Samurai, and how to make automation wildly profitable.

And I want to talk about what I see go wrong. 

Firstly, to be clear about what we do, what makes PPC Samurai unique is our ability to customise, systemize and automate the everyday work you do in your agency. You can then use those time saving automations to create a bank of time that can be spent on other important tasks that help to deliver profitable outcomes for the business. 

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However, with great power comes great responsibility. 

We have seen it thousands of times, the ability to automate anything can leave agencies and individual managers somewhere between nervous-paralysis and kid-in-a-candy-store. That can result in an undirected implementation and a lack of clarity around what you’re trying to achieve and how to measure if it was successful; leaving gut instinct to drive evaluations. For automation to be effective, you need to come to it with some very clear goals and a laser like vision on what you want to automate first and for what business outcomes. And you need to make sure the whole team is on the same page. 

In addition to profitability, other reasons to implement automation can include: 

  • Freeing the time to spend being more creative on accounts (moving from execution to strategy) 
  • Offering a more detailed and expensive service (business uplift)  
  • To prove ongoing value to your current clients (churn reduction: churn is the silent bottom line killer) 
  • De-risking your agency (staff risk, IP protection, quality control).

The Three Ways We Typically See Agencies Approaching Automation

Bucket One Implementation – Automate Me

These agencies want to manage more clients the way they already do and with the team they already have. Their goals are centred on financial profitability and are looking to use automation to create a wider margin between labour costs and revenue. We have seen agencies triple their client to manager ratio through PPC Samurai automation and implementation, which delivers huge bottom-line returns. Of course, this process will deliver some complimentary benefits (like consistency and quality control), but within ‘Bucket One’ the goal is purely to automate the work you’re already doing, to create more time in your workday.

You can then spend this time you’ve banked on scaling your client to manager ratio, or on prospecting for new work, or whatever else will create profitable outcomes for your agency. But first and foremost it’s about creating and banking time for the business. Or, in other words, using your labour costs more effectively to return a better ROI on the wages you’re paying.

Bucket Two Implementation – Automate The Work I’m Already Doing PLUS What I Know I Should Be Doing

These agencies want to free up time to do work they don’t normally have time to do. We define this as not only automating what you are doing, but also the work you “should” be doing but don’t always get time to do at the current staff to client ratios. This is the work that you feel guilty for not completing or that causes you anxiety and introduces competitive risk; eg. another agency could poach your clients by doing this work more effectively, and in the back of your mind you know it and worry about it.

‘Bucket Two’ implementations are about doing both the work you’re already doing AND the work you should be doing but currently aren’t (at least, not consistently).

If this balance is what you’re looking for in a tool, you need to be prepared that as you introduce new processes and strategies into your agency, you’ll inevitably have to manage some of the outputs of those new processes. This means you won’t have as much time left in your time-bank to spend as those ‘Bucket One’ agencies as you’re already choosing to spend some of that time on new work. Some of your ROI (time bank) is spent on taming the chaos you’re experiencing within your SEM accounts.

Bucket Three Implementation – Automate The Work I’m Doing, Should Be Doing and DREAM of Doing.

These agencies want to free up time to do the work they’ve always wanted to do but could never justify at the current margins. This is the work you’d “love” to do and is often about pursuing best practice and/or innovation goals or moving upmarket. Of course, many agencies want to get to this place eventually, but BEWARE: this is the most discretionary of all automation goals and should be approached with caution when you’re just starting out. ‘Bucket Three’ is about implementing processes that you want to do but don’t need to do within your current business model.

If you get excited about all the shiny new things you can do with the time-bank you’ve created (Bucket Three) but your initial motivations for implementing automation were to drive profitability through the increased client to manager ratios, then you have a mismatch between motivations and outcomes and that’s going to cause friction and frustration when you try and understand why your implementation isn’t paying dividends the way you’d anticipated. You risk feeling that the implementation wasn’t successful, but that’s not necessarily the case; it’s just that you’re not measuring the right outcomes and or perhaps your team weren’t all adhering to the initial pilot strategy.

This is where scope creep will eat your ROI for breakfast.

Now, that’s not to say that ‘Bucket Three’ implementation isn’t a fantastic place to aim to be (you might have the opportunity to charge more, to move your business upmarket, to be a market leader, to win new business and to reduce churn or to upsell), it’s just that the risk lies in failing to make this decision consciously and finding yourself here by accident.

So before you start, be very clear which of these buckets your agency fits into. If your goal is purely to drive profitability through increasing the clients under management without new hires, then it’s critical that your implementation only focuses (to start) on automating what your managers already do. And then measure the uplift of time before you start anything new. To effectively measure this you also need to make sure that you maintain high expectations of work output as otherwise you risk that uplift of time being eaten up by a slower work pace and/or a few more coffee walks. We all know that time is (to a certain extent) elastic. 

What Do We Suggest?

Over the years, we’ve worked with thousands of agencies to help them systemize and automate their paid search management.

In addition to starting with a clear scope, here are a few of our learnings:

  • Start simple and work towards automating your biggest pain points first.Cool stuff can wait if budget management is what’s eating a lot of your weekly management time.
  • Get some consensus on the way in which your agency manages a certain thing, so you can template that strategy and roll it out. Automation is most effective when it’s systemized across the organisation.
  • Implement an agency-wide naming protocol. We can not stress this enough. Truly effective automation counts on it.
  • Having a clear vision for your agency value proposition will help you decide what to automate first and what can wait.

 

What Else Will Help You Assess ROI?

In addition to a clear scope, here are some other data we’d suggest you have at hand to aid you in accurately measuring the ROI of implementation:

  • Current % of time an account manager spends doing ongoing management of paid search accounts (vs internal/external meetings, social account management, other internal tasks like training or content writing). You need to know where managers spend their billable and non-billable hours.
  • Full-time equivalent of your account managers
  • Average annual salary for an account manager within your organization
  • Average monthly revenue per PPC client
  • Current profit margin generated from paid search for the business

We even built a fancy little ROI calculator here that can help you work out, with that data, what ROI you should expect from implementing PPC Samurai.

Here at PPC Samurai we can help you design and begin a pilot designed to ensure that your implementation of our platform is successful and aligned with your business goals. We can help with edge cases (those you’ve experienced already or those we see coming) and we can help you solve the management pain points that are stopping you from achieving the levels of profitability you’re aiming for. We thrive on it.

In the meantime, until we chat, maybe consider what profitability and ROI should look in your agency. How will you know the implementation was successful?

And we can go from there….

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