It’s tempting to focus on scale when it comes to paid search, but you need to constantly cut the fat. There will always be wasted spend that should be adjusted & turned into new avenues to scale. The issue, believe it or not, comes down to compensation
Let’s suppose you hire an ad agency to manage your spend, or a direct relationship with a specific ppc provider. Chances are, you are paying them a percentage of spend. You might even have some broad metric figures they need to hit.
See the issue?
The agency makes more if they spend more of your budget, so why cut back on spend if their broad margins are being met? Now let’s flip it. Now suppose, you paid your agency a flat fee. This is even worse in your case! If they are satisifed with the results, that ad agency is on a set it and forget it mentality. Why do all that work to cut the fat without getting the upside reward.
When it comes to keeping a paid search agency, keep pushing the envelope. Indicate that you’re interested in keeping the top line steady, but bring costs down by say 10%. Keep the numbers small so it’s a goal that they can hit. Also, be sure to get a detailed report on what was done to bring the costs down. This can be very telling of not only the agency’s skill set, but also their proactive attention to detail on your account.
The goal here is to allow both sides to benefit from a proper ad agency structure. You want to reward the agency for growth, but at the same time, keep them accountable for costs & margins. With the proper structure in place, you will have a marketing agency that is a true partner to your business – verses another service agency not dialed into your organization collecting a fee .