Crossing The Streams

If you’ve been around the digital marketing block, you’ve probably worked with a few ad agencies. You’ve probably noticed the gulf between what is promised and what is delivered. You’ve felt the pain of having your account passed from the person that knows what’s going on to their replacement, who was less-informed. Like many shops, ad agencies have a good deal of overhead, and they have to pay for that with higher management fees. But only a small sliver of that management fee goes into the pocket of the people that actually manage your paid media account on a day-to-day basis.

Let’s say you’re spending $30,000/month on Google Ads with a 15% management fee. Chances are, only a small fraction of the $4,500/month management fee you’re paying goes into the pocket of the person making the vast majority of the day-to-day management decisions. This person probably has a full book of business to worry about. This person probably makes the same amount of money whether your account is incredibly profitable or a huge loss. Driving high-level performance normally takes a good deal of time. If the PPC manager doesn’t stand to make any more money by spending more time on your account, do you think they’re going to do it? Sure, it’s the right thing to do…but this is corporate America we’re talking about. If that PPC manager spends more time on your account but doesn’t make any more money, then their real hourly wage necessarily decreases. What’s good for you is bad for them. The incentives are crossed.  

My firm belief is that incentives should be aligned instead of crossed. That is, the more profitable an ad account is, the more money the PPC manager should make. I want to incentivize the PPC manager to take personal responsibility for that ad account’s profitability. Their wagon should be hitched to the advertiser’s horse. But too often, these incentives are crossed instead of aligned, and nobody stands to lose more than the client.