Beware of ”Soft” costs; the cost of employee time and effort is often one of the most overlooked aspects of paid search marketing, and something I consistently bump up against.
I have often seen clients chasing the long tail in search, getting better yields, and throwing it all away in employee and agency costs. One client in particular showed me how they increased their efficiency by $200,000 a year. They were very proud because they had received a promotion after they presented their results. I decided to look into it, as I was an advisor of digital strategy to this client.
The actual result? They had not only hired an extra employee to handle the increased workload, they had paid an additional $430,000 in ad agency hourly management fees, for a total extra cost of almost $550,000. Net loss? $350,000.
Where these types of costs can be justified is when the number of conversions drastically increases; however, in this instance that was not the case.
I demonstrated to the client how their entire campaign could be run by Didit, generate about 2.7x the number of conversions for the same cost, and improve conversion quality. In addition, by using automated tools, the entire system would beome more efficient as it scaled, not less.
When I showed him the analysis he didn’t change what he was doing. Why? Because the additional employee he was able to hire, and the additional budget for the agency gave him more power. He also had the great story of performance… even though it was an illusion of efficiency. Performance can be perceptive.
Be careful when you assess talent and performance internally, especially when it comes to your SEM staff. If you do not understand what you are judging, you may be rewarding the wrong kind of behavior.