Why I Don’t Like One Of Our Business Models

One of the web marketing things we do here at Tailored is managing client’s Google AdWords pay per click ad campaigns.

It’s something I’ve been doing for years and have a fair bit of success at.

We generally charge a set up fee and then 15% of the ad spend or $50 per month (whichever is greater), along with a set up fee that varies according to how big the campaign is.

I’ve just been comparing the AdWords campaign of a client where we took over from their previous web developer.

Over a 7 month period (the exact same months for 2008-09 and 2009-10) here’s how we did:

Clicks

Them: 3,333

Us: 4,757 (1,424 more)

Click Through Rate (How often the ads are clicked on)

Them: less than 0.5%

Us: 4.03% (8 times more!)

Average Cost Per Click

Them: $1.26

Us: $0.26  (Paying $1 less per visitor!)

Total Cost for 7 months

Them: $4,211

Us: $1,219 (just under $3,000 saving)

Here’s The Stupid Bit

So we’ve saved the client $3,000, whilst getting them 42% more visitors (and they’re much more targeted visitors who are much more likely to buy).

The old developer was charging a flat $200 per month.  7 months = $1,400

We charged 15% of the ad spend.  7 months X $50 = $350

So now you can see we saved the client a total of $4,050 in 7 months ($3,000 ad saving and $1,050 management saving) – whilst increasing their visitor numbers by 42%.

Just goes to show that shit work can be profitable (if we kept the cost per click high and kept spending the client’s money with gay abandon, like the old web developer did).

Because we’ve done such a great job, we charge way less than the previous idiots.

Stupid.

I Don’t Like That Business Model

We need to find a business model that rewards us for doing what we’ve done above.

Tying our reward to a reducing rate the better we perform is so stupid it defies belief.

The killer is, of course, that there are tons of incompetent people out there willing to manage your AdWords campaign for 10% of your ad spend without a set up fee.

Then they’ll spend all of your money, give you some bullshit report and you’ll be thrilled you went with them.

Safe in the darkness of not knowing what a decent AdWords manager could do with your campaign.

What Business Is

Business is about continually testing, testing, testing so you get the best results.

If you’re not testing you’re almost certainly wasting money.