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Convincing your clients to increase their ad spend is one of the toughest conversations you can have if you work at an SEM agency.

There can be multiple reasons behind your desire to increase your client’s budget. Maybe you’ve seen consistent success and are trying to ramp up their campaigns. Maybe you’re running a percentage-of-ad-spend pricing model and want more revenue in your own pocket. It’s even possible you’ve been struggling to produce results specifically because of the restraints a small budget creates.

Regardless of the reasons why, it’s important that you communicate how increasing their ad spend will benefit your clients. And this post will walk you through five simple ways you can (plus how to handle a few objections).

1. Getting results? Try scaling up

If you’ve been running the campaign successfully for some time, you may want to increase your client’s budget in order to further improve performance.

For example, let’s say that your monthly budget is $1,000 and you took over the campaign with a CPC (cost per click) of $5. This means that — if your budget is evenly dispersed throughout the month — the campaign generates 200 clicks. If you’re able to lower the CPC down to $2.50, then you should also double your traffic without increasing your budget.

Considering that they’re paying half of what they used to pay per click, you can then convince your client to increase their budget accordingly. Increasing their budget by a factor of two would increase clicks by a factor of four.

That’s an opportunity that a client will likely be more receptive to. Doubling down on wins is a great way to convince clients to increase their ad spend in a way that shows them direct results.

2. Show competitors’ budgets are higher

An argument that many marketers rely on to convince their clients to increase ad spend is that their competitors are spending more. Now, this is a great way to motivate your clients to spend more. And, especially in the pay-to-play word of PPC, allowing your competition to monopolize certain keywords certainly won’t help your CTR (click through rate) or CPA (cost per acquisition).

prove results to clients

However, to convince your clients to expand your budget, you’ll need some proof. Thankfully, there’s plenty of competitive analysis tools out there for you to choose from. Here’s just a few to start:

If you can show how your client’s competition is drowning out your client’s ad visibility due to their larger budget, you should have a better chance of getting more ad spend to work with.

3. Prove current budget is too small for testing

Any PPC or CRO expert will tell you that the root of all success in paid advertising comes from diligent split testing. Sadly, one of the biggest mistakes that some PPC managers make is failing to give their split tests statistical significance. This is either because they’re not letting them run long enough, or failing to generate enough visibility to reach enough users to analyze.

Both of these are actually caused by too small of a budget. To run statistically significant split tests, you need to be able to generate enough traffic in a short enough amount of time before labeling them as wins or losses. Otherwise, you may be missing out on opportunities that you’ve deemed to slow-moving or ineffective, only because too few users were exposed to your new variant.

Convincing your client to increase their ad spend here should be easier than other situations, mainly because this is a problem that you’ll face rather immediately. Without enough budget, you’ll have a pretty difficult time getting any PPC campaign up and running, let alone optimized.

4. Increase the number of channels the client uses

We’ve mentioned how proving to your clients that their competitors spend more is a great way to convince them to increase ad spend. Well, showing them that their competitors are advertising across other channels is another great way.

use more channels than adwords to increase ad budgets

It turns out that FOMO (fear of missing out) is actually a driving force when it comes to competitive PPC. No client wants to be missing out on possible views, clicks, and sales that their competition is capitalizing on. Worse than that, you don’t want your competition getting these leads without having to compete with you on the keyword bids for them.

Keep in mind that the more marketers are bidding on certain keywords, and the more traffic they generate, the higher the minimum bids will be. Which means that you missing out on any given paid channel is one less bidder in the market for your competition to fight with.

5. Create new goals for your team to chase

The last way agencies can convince their clients to increase ad spend is fairly straightforward. If you’ve consistently been hitting goals that your clients are setting for you, maybe it’s time to up the ante.

Setting goals that are a bit beyond your reach and will push your team to improve their campaigns even further will do two things for your agency-client relationship:

  1. It will show your client that you’re not resting on your laurels, but continually looking to grow their business
  2. It should open the door to discussions about increasing their ad spend to help with these newly-set and higher goals

Keep in mind that providing some tangible numbers behind these new goals and opportunities will be key in convincing your clients to increase their ad spend.

Much of the success in convincing your clients to increase their budget comes down to communication. Keep this in mind as you guide your clients through the conversation to make sure they understand you’re trying to grow their business, not just your bottom line.

6. Bonus: Handle objections with clarity

When raising the question of increased ad spend, you may run into some pushback from your clients. That’s only natural, as they’re the ones who’ll be spending more money. And nobody wants to throw more money into something that they aren’t certain will be generating more revenue in return.

There are countless different objections you may confront during this conversation. Below are just a few you may have to deal with:

  • Why such a big increase? We won’t increase more than X%.
  • I’m not seeing any results, why would I increase my budget?
  • Can’t you get more clicks with the budget you already have?

Whether you’re dealing with arbitrary budget limits, a lack of results, or a stubborn client who simply doesn’t see the opportunity, the solution will usually be the same. And what is that solution? Strong tracking and communication between client and agency — so you can clearly show your clients the value of increasing ad spend.

Here are some more tips on how to handle objections your clients may have to increase ad spend. (Also, if your clients are objecting to adopting call tracking, here’s how to overcome that.)

Directly tying your performance to their newly generated revenue and business growth will make these conversations go much smoother.

Conclusion: Communicating value increases ad spend

In the end, convincing your clients to increase ad spend is all about communicating its value to them. The more clearly and more concisely you can explain how increasing ad spend will increase new winning opportunities, the better odds you’ll have at seeing that budget increase. Make sure that it’s the client’s growth that is prioritized, and soon enough you’ll see more trust, faith, and — most of all — budget.

Sean Thomas Martin is the Content Manager at KlientBoost — a PPC & CRO agency in Irvine, California specializing in rapid testing and conversion-centric design that generates ROI on top of revenue.

The post 5 simple ways agencies can get their clients to increase ad spend appeared first on CallRail.

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Marketers that aren’t working on a million things at once just don’t exist. (And honestly, do we even want them to?) The ability to wear different hats is an admirable, sought-after trait in this competitive domain. But it can be complicated to manage multiple projects and thoroughly analyze how your work is performing.

Getting the work done is good. But proving that the work is helping grow your client’s business — while also growing yours —  is far better.

Most marketers find themselves caught in a never-ending dilemma trying to answer one major question: “What’s the best way to show how my work is performing?” The answer? Metrics.

Metrics are the key performance indicators that let marketers know when things are going well or failing. Determining which metrics are most pertinent to measuring success is a continuous process, but customer acquisition cost (CAC) and cost per lead (CPL) are definitely two metrics that you should always have your eye on.

Learn more about measuring actionable metrics vs. vanity metrics.

Calculating Customer Acquisition Cost (CAC)

CAC is a calculation of how much cash a business has to spend in order to earn a new customer. Marketers are well aware that you have to spend money to make money. However, the goal is to make sure the amount of money you’re spending to acquire new customers remains less than the revenue that customer generates for your company.  

CAC directly correlates with another important metric, lifetime value (LTV), which forecasts the total amount of revenue a business can earn from a customer. Together, CAC and LTV give marketers the ability to understand how long it takes to earn back your initial marketing and sales expenses.

To do this, first establish the period of time for which you’re going to calculate CAC. (This could be monthly, quarterly, or yearly — whatever you find is best for your organization, or your client’s organization.) Then, combine your total marketing and sales expenses within that time period, and divide that figure by the total number of customers gained in the specific timeframe.

CAC = Total marketing spend/ total number of new customers

You want your customers to generate enough revenue to cover your expenses, and a low CAC means you’re accomplishing that. This also means your spend is being utilized to successfully convert leads through efficient channels. The alternative — spending too much money on customers that aren’t contributing to substantial revenue growth — could result in serious long-term damage.

Check out how this agency lowered CAC by using CallRail.

Calculating Cost Per Lead (CPL)

CPL differs from CAC because it reveals how much is being spent to acquire a new lead — the stage before a prospect converts to a customer. In other words, a healthy CPL helps you achieve a healthy CAC. To calculate CPL, divide your total marketing ad spend by your total number of leads.

CPL = Total ad spend/total number of new leads

Similar to CAC, the goal should be to maintain a low CPL while maintaining a high quality of leads, in order to maximize your ad spend. You can also choose to leverage this metric in unique ways, like tracking CPL by channel or industry for a more granular view.

CPL is a necessary metric to include in attribution models, but can be extremely difficult to factor in if you have to pull data from multiple sources.

You’re now able to automate CPL calculations with CallRail’s Multi-Touch CPL Report, which looks at how much you’ve spent on Google Ads campaigns and which of those campaigns are producing the most-valuable inbound call leads. With this tool, marketers can alleviate many of their attribution frustrations, and use CPL data to enhance lead capture strategy and create cohesive attribution models.

Why CAC and CPL should matter to you

Your client wants to know you’re using their money to help sustainably scale their business, and you want to show them you’re doing exactly that.

All of this centers around two common goals between you and your client — consistently acquiring new customers and increasing revenue. The relationship between these metrics helps accomplish both goals. Low CAC and CPL evidence healthy strategies that are leading to quality customers that are spending good money.

Long-term success for you and your clients lies in the details that metrics like CAC and CPL provide. Tracking these metrics provides valuable insight to evaluate effectiveness, optimize budget strategies, and strengthen rapport with your clients by verifying your worth.

If you’d like to add the power of advanced call tracking to your agency marketing strategy, you can start right now: Request a personalized demo of CallRail or begin your 14-day free trial.

The post CAC and CPL 101: Why these metrics matter to agency clients appeared first on CallRail.

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