Why Clever Zebo charges a flat monthly fee for online marketing services

September 15, 2015

Back in the aughts, charging on a percentage-of-spend basis was all the rage for online marketing agencies.

In that model, clients pay some percentage of their search engine marketing (or overall digital advertising) spend each month. The percentages would look something like this:

  • Up to $100,000 in ad spend, agency charges 6% or $6,000 per month
  • Up to $250,000 in ad spend, agency charges 4%
  • At $1M in monthly ad spend, agency charges 2%

These are just ballpark figuresRead more…

Back in the aughts, charging on a percentage-of-spend basis was all the rage for online marketing agencies.

In that model, clients pay some percentage of their search engine marketing (or overall digital advertising) spend each month. The percentages would look something like this:

  • Up to $100,000 in ad spend, agency charges 6% or $6,000 per month
  • Up to $250,000 in ad spend, agency charges 4%
  • At $1M in monthly ad spend, agency charges 2%

These are just ballpark figures — of course, every search marketing agency charges differently.

Here’s the hypothesis behind the popular percentage-of-spend model:

  1. As the account grows, the agency makes more money, and the client is happy because growing spend inevitably suggests growing conversion totals and revenue.
  2. It’s a simple method for approximating how much work the agency might have to invest in managing and structuring an ad campaign. Lots of spend suggests greater sophistication in Google AdWords.
  3. Finally, this is a way for agencies to charge a premium to large companies with large budgets.

Clever Zebo never has, and never will, charge on a percentage-of-spend basis. Here’s why this agency pricing model fails the client:

  1. Agencies are incentivized to recommend higher budgets. The higher the spend, the more the agency earns. There’s an indirect correlation with the success of ad performance here, but the most direct incentive is to keep spending more, no matter what.
  2. If spend drops, agencies must de-prioritize the account. Even if the ad spend drops for entirely logical business reasons and not due to poor performance, the agency suddenly has a smaller fish on their hands than they bargained for up front. It’s a difficult negative incentive — reduced compensation despite improved performance.
  3. As ad spend increases, the total cost to the client goes up. Usually, hiring an agency starts to pay off in ROI. If clients pay an agency more money as their ad spend rises, this hurts overall ROI. The fee to the agency must be considered in the ROI calculation.

We believe that a flat monthly fee creates the right behavioral incentives on the part of a marketing agency. The results we’ve seen with a flat monthly fee model are:

  1. Clever Zebo must demonstrate success quickly. The faster we show solid results and growth, the more confidence we build that the program can work and should be expanded.
  2. Our clients tend to see increasing ROI as the relationship goes on. Maybe the first month is a wash because the fee our clients pay us goes toward laying the groundwork for success and setting up and optimizing existing efforts, but once campaigns are optimized and conversions start to go up, the fee to us remains the same month after month, so the ROI graph goes up and to the right.
  3. Clients tend to feel like they’re entitled to as much of our time as they need in order to achieve the results we were hired to get. When there are no per-hour charges, or caps on total consulting hours an account can consume before prices go up, Clever Zebo is able to prove we’re confident in our service and the expected results.

For example, one recent client saw tripled conversion totals and a 48% better CPA in AdWords within the first month. Another saw a 249% lift in Facebook Ads conversion rate and a 67% drop in AdWords CPA within two months. If our fees rose with ad spend as clients saw these efficiency increases, our clients wouldn’t see the same margin on hiring us. With fees that stay the same month after month, Clever Zebo is challenged to demonstrate  significant improvements in efficiency in order to keep each client’s business.

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Facebook Relevance Score: what it means & how to improve yours

February 13, 2015

We do a good deal of Facebook Advertising around here, so when Facebook released information about its new Relevance Score measure, we thought it helpful to break this down.

The main advantage of managing and increasing your Relevance Score is to achieve lower cost per click and more efficient delivery for your Facebook Ads.

What is Facebook’s Relevance Score?

In a nutshell, it’s a measure of how relevant your ad is to the people you’re targeting.

Google hasRead more…

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We do a good deal of Facebook Advertising around here, so when Facebook released information about its new Relevance Score measure, we thought it helpful to break this down.

The main advantage of managing and increasing your Relevance Score is to achieve lower cost per click and more efficient delivery for your Facebook Ads.

What is Facebook’s Relevance Score?

In a nutshell, it’s a measure of how relevant your ad is to the people you’re targeting.

Google has had a metric like this for many years. They call it Quality Score, a 1 to 10 scale indicating how good of a search result your ad makes for a given keyword. Advertisers with high scores are rewarded with a lower cost per click, while those with low scores suffer from poor impression share and pay more to reach the same users.

At first glance, the Relevance Score introduced by Facebook promises to do some of the same things.

When your ad is shown to your target audience on Facebook, they have a few options:

1. Respond positively: like it, share it or convert.

2. Respond negatively: hide or report your ad

3. Do nothing.

The more people respond positively to your ad, the better your Relevance Score. The more negative feedback you get, the worse you’re scored. Before your ad is live and has real feedback to rely on, Facebook will make guesses about people’s behavior and assign a starting score.

Where do I see my Facebook Relevance Score? 

You can now add Relevance Score as a column to reports. It looks like this.

Screen Shot 2015-02-13 at 3.35.48 PM

How do I improve Facebook Relevance Score?

There are a number of factors that contribute to your score. Overall, if your ads resonate nicely with your target audience, and especially if they convert well, you’ll have no issues with Relevance Score.

If you need to troubleshoot a low score, here are some good places to start:

1. Tighten your targeting. Try some niche segments with respect to interests, in-market categories, etc. If you achieve a better score by doing this, slowly fan out your targeting from there — or better yet, create dedicated campaigns for each market segment, each with tailored ads and images.

2. Focus on the image. Your prospects will see the image associated with your Facebook Ad before they read the text, so A/B test images rigorously until you find one that resonates. Be careful with risqué photos, though. While they might score a few curious glances at first, inappropriate content is more likely to get your Relevance Score in trouble.

3. Keep your ads fresh. Every ad has an expiration date, especially on Facebook where each user is viewing so many pages daily. Continually cycle your ads and keep it interesting. Fresh engagement from users will help your Relevance Score.

Got other ideas for how to boost Relevance Score? Tell us in the comments.

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3 winning A/B tests B2B software sites must try

June 24, 2014

As we’ve studied and delved deeper into conversion path optimization for B2B software and tools, we’ve noticed as an agency that there are a handful of areas always worth testing.

In this post I’ll discuss the art of testing into a more effective value statement, how to toy with guarantees and find one that’s appropriate, and what makes a badass signup form that mints money.

These aren’t sure to work for everyone, but they are A/BRead more…

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As we’ve studied and delved deeper into conversion path optimization for B2B software and tools, we’ve noticed as an agency that there are a handful of areas always worth testing.

In this post I’ll discuss the art of testing into a more effective value statement, how to toy with guarantees and find one that’s appropriate, and what makes a badass signup form that mints money.

These aren’t sure to work for everyone, but they are A/B test ideas that we’ve seen win nicely for B2B software companies, which just might make them worth trying.

1. Can we pack more value into a headline? Websites (and landing pages) often have a key value statement. If someone drops by and reads nothing more, at least they’ll read this. We’ve found it useful to ask: can the value statement communicate more benefit than it does now?

We ran a test to this end on CleverZebo.com and here’s what we learned.

There were three variants:

  • Hands-on marketers who deliver revenue. (Original)
  • Results-driven marketing that pays for itself. That’s clever. (Variant A)
  • Results-driven marketing that pays for itself. (Variant B)

When you consider the original headline on top, against the winning headline beneath it, there are a few considerations.

Clever Zebo homepage A/B test

Delivering revenue sounds good to a business owner, but getting results and paying for yourself — being ROI positive as a vendor — is much better.

“Hands-on” describes us as roll-up-your-sleeves marketers who take on real projects, but “Results-driven” goes deeper than that. It tells the business owner not to take our word for it that we’re doing lots of work, but instead to hold us accountable for results.

Flipping your value statement is always a strong A/B test, especially when you think through the benefits packed into it from the perspective of your customer.

2. Can we offer a powerful guarantee? Retailers tend to offer guarantees, whether it’s a price match or an assurance of quality. Why don’t B2B software companies do the same?

There are a few elements worth testing here:

  • Image / guarantee badge
  • Guarantee messaging
  • What happens if the guarantee is not met

If you don’t have a designer on hand who can whip up a killer badge for your guarantee A/B test, here is a good resource for decent badges that are free to use.

Our friends at Crazy Egg recently published a useful post on creative and rarely used guarantees that may be worth A/B testing.

Here’s a guarantee used by Musement.com, an international travel and tour booking site.

Guarantee for A/B testing

 

The strengths of this guarantee are that it re-emphasizes the benefits of working with them, it builds trust with the “lowest price” promise and it’s specific about what you can expect.

It would be worth investigating whether these promises can be neatly shoehorned into a beautiful badge, and whether conversions rise if the visitor is told what happens if the guarantee is not met.

3. Can we offer more & ask for less in our signup form? Your signup form is important for capturing data, but it’s also a sales opportunity. On the signup page, you’ve yet to close the deal. Instead, it’s a critical phase where you must continue to shine. Check out how Box.com addresses this problem.

Box signup form

They collect a lot of fields, but they also build confidence through the “risk free” badge and the assurance of security and encryption. They also remind you what you’re signing up for: a business account with 5 users, unlimited users and more. They confirm the price on this screen. This is clean and clear-cut.

Box teaches us to test selling alongside the signup process, but also to keep that sale professional, useful and relevant. There’s no marketing-speak. It’s just the benefits listed as fact.

The other testing opportunity this example recalls is an obvious one: can we collect fewer fields and still accommodate the visitor? In many cases, requiring fewer fields has proven to convert better. So what’s most essential?

I once introduced a 2-field signup form solution to a fast-growing B2B software company. That shrank the signup process down from 6 fields and was highly controversial, but when it finally went live, it improved conversion rate by close to 50%. The lesson there isn’t just that you should test simplifying your form, but that opinions don’t count the way A/B tests and data count.

So do you really need the visitor to create a password, or can you simply email an auto-generated password to make that visitor’s upfront investment easier?

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