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PPC Agencies Promising/Forecasting Results

Oftentimes when speaking with a potential client we're asked to predict how much improvement we can make in their program. Our answer is always the same: "We don't know." We thoroughly understand why prospective clients want to know: we all want to know in advance what the impact of a change will be on ROI. What I don't understand is why they'd believe what we tell them. While we can usually guarantee a prospect that we can hit their competitive search efficiency targets (unless the volume of search is too small), we can't project what the impact will be on their top line. If we have good sample data from them, we can often speak in detail about what their current problems are -- thin keyword lists, poor bidding, bad use of match-types, poor landing page choices, whatever the case may be -- and what we'd do to address those problems. We don't know what the impact of those fixes will be. Indeed, we can't know. Three factors determine the size of the opportunity:
  1. The Volume of Search. PPC responds to demand, it cannot create demand. The company providing bleeding edge service that no one knows you can outsource is going to have a hard time with search.
  2. Relative Conversion Rates. If competitors are more effective at converting visits to sales due to selection, pricing/offers, name recognition, or site design it will be difficult to generate traffic cost effectively.
  3. The Efficiency Targets. Even if a company competes well, if its competitors are willing to spend a larger percentage of their revenue on marketing than our prospect can, we will have a hard time competing for prominence.
We can't gauge any of these factors, let alone all of them. Even if we could know all these factors historically it wouldn't necessarily allow us to predict the future in each area. After all, how many companies out there are hitting their monthly forecasts for 2009? Many agencies are more than happy to make bold predictions -- some without even seeing any data! -- but what mystifies me is that advertisers actually listen. Some agencies even tout their advanced, highly scientific, very very complex algorithm for predicting the future. Hokum. They can't make these projections any more accurately than we can. We've lost out on many RFPs because we wouldn't predict the lift our services would create while the winning agency could predict a 73.4% increase in the top line and 22.7% increase in the bottom line, or whatever. More than a few of those advertisers have come back to us after a year, because the other firm couldn't deliver on their promises. I don't really blame the agencies for making the projections. We've been strong-armed into writing down a number from time to time. Because it's so often demanded, we even kicked around the idea of building a fancy looking crystal ball calculating machine that would: take inputs, chug impressively and belch out an answer. We didn't do it; too disingenuous for our tastes. I do blame the advertisers for a) asking for something no one can give them; and b) actually paying attention to the responses. The axiomatic old joke:
Q: How can you tell when a salesperson is lying? A: Her/his lips are moving.
is not too far from the truth. We try to be different, and I think we are, but why would anyone believe that? Selecting a vendor should be based on a good match between the agency's tools and knowledge and the advertiser's needs. Their performance should be judged based on their reputation and careful questioning of their references. The reference calls can be very revealing. Every agency will give you references from clients who love them, the difference is whether the reference knows their stuff. Good agencies make the sharp clients happy, bad agencies make only the uninformed happy. Choosing a vendor based on who makes the biggest promise is a recipe for disappointment.
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