But the real question on your lips is; “If I outsource PPC management to a white label provider, will it be profitable?”
We get it. On the surface, it might be hard to imagine how a service like this could be profitable for your agency. After all, they are managing headcount and delivering outcomes much as you would yourself.
The advantage a white label PPC agency has over a client-facing PPC agency is economies of scale and simplicity of process. Basically, the part of the PPC management ecosystem the white label provider handles is the delivery of the work. This component is easier to systemize than the client-facing activities, which means each account manager in a white label agency can handle a larger book of ad accounts. By increasing the capacity of each employee, the cost per account decreases, and the profit is passed onto the client-facing PPC agency (you).
So, the short answer to the profitability question is yes, but the longer answer is “it depends”… So let’s explore that caveat in more depth below.
Under which conditions is white label PPC profitable?
As we said above, white label PPC isn’t going to be profitable for every agency. It’s critical that you have the right people, processes, and profit margins in place to ensure this approach to scaling is best for you.
In the end, the key to white label profitability comes down to two things; your market positioning and whether or not your pricing aligns with your white label provider.
Market Positioning
For a white label relationship to be profitable, you need to be working with businesses big enough to consume a reasonable PPC management cost.
For example, if you are targeting predominantly small businesses and startups who can only afford a small management fee of between $300-600 per month, then it’s unlikely you will be able to find a reputable white label provider who can comfortably sit within these rates and deliver you a profit.
One caveat to the above scenario is if you offer additional services such as social media management or SEO to these clients. Adding PPC management to your services list as part of a bundle deal could increase your profitability, even if the margins are minimal on the PPC component itself.
Alternatively, if your agency is positioned at the small-to-medium business sector, where their budget for ads management is significantly higher at $1,000+, then you are in a very strong position for scaling profitably with a white label partner.
White label pricing models
As well as your market positioning and the price you charge your clients, the profitability of your white label partnership depends on an alignment between pricing models. You can either find a white label provider who already has the same pricing model as you or change your pricing model to suit the partner you want to work with.
There are four white label PPC pricing models to be aware of:
- Fixed Fee. This model is very common because it’s fairly simple and easy to understand. The white label provider may say something like “we charge $500 a month for ad spends up to $5,000”, for example. Here is a visual of what this model looks like for you:
- Percentage of Ad Spend. This approach calculates your cost dependant on the monthly ad spend of the client. For example, the white label agency might charge you 15% of the ad spend the client is investing. Below is a visual of what this looks like:
- Hybrid. The hybrid model of white label pricing will include a “Fixed Fee” component, and then a “Percentage of Ad Spend” component too.
- Pay-per-result. This model is one we strongly recommend avoiding because you are essentially being held accountable to a lead-to-sale conversion rate that you have little control over.
If your agency is positioned in the market so that it allows for an adequate PPC management fee, and your pricing model is aligned with your white label provider of choice, then you are set up to scale profitably.
A significant advantage of growing your PPC services with a white label provider is the predictability. If you can nail down the right positioning and pricing to be profitable, then you can eliminate the risk and stress of additional staff overheads and underutilized employee capacity as you grow.
So, how can you increase the profitability of a white label partnership?
#1. Improve your client communication skills
Communication is the backbone of any successful client relationship. If you can effectively articulate the expected outcomes of the engagement to a client, have them accept those outcomes as positive, deliver on the set expectations, and then report back to them about the results in a succinct manner – client retention and agency growth become much easier.
All of this becomes even more critical when you have a third-party PPC provider in the mix because there is an increased risk of communication breakdown.
If you pick a white label partner with poor communication skills, or one unwilling to align with your client’s desired form of communication, it can directly impact your profitability. Not only will you start to lose clients at a fast rate, but the clients you do have will take up more of your team’s time due to a repetitive cycle of information sharing.
Here are 3 things you can do with your white label partner to ensure they will enhance rather than hinder your client communication and profitability:
- Commit to goals. If you don’t have something tangible that you and your PPC provider can work towards – it’s a recipe for a poor client experience.
- Define clear boundaries. Poor communication about who is responsible for each part of a campaign creates tension and resentment which turns into unhappy customers if you don’t manage it well.
- Set a schedule. Determine how often you will interact, which channels you will use for communication, and what the expectations are to turnaround an answer to a question.
#2. Align your onboarding processes
The impact you have on a new client at the beginning of your relationship is one of the clearest indicators of future success.
They have signed on the dotted line and are handing over their PPC marketing budget to you. At this point in time, you have established only a baseline of trust. Enough to secure their business, but not enough to take it for granted. You need to build trust as quickly as possible with a professionally executed onboarding experience.
Given your white label PPC partner has an onboarding process too, you need to sync with this, so the experience for the client is seamless. Work with your white label provider to document an onboarding checklist and itemize the key steps of the process in as much detail as possible. Below is an example of a high-level onboarding checklist that includes the important elements you and your PPC provider should discuss:
Be aware that your white label provider has lead times too, so if they are going to take a certain amount of time to deliver something, ensure you build a buffer of time into the deadline you quote to the client. This way you will always over-deliver on the client’s expectations.
If there are specific pieces of information or questions your white label provider needs to answer from a new client, make sure they are delivered to the client at the same time as your initial discovery questions. Don’t bombard the client with questions from multiple angles.
It’s all about aligning your onboarding process with your white label provider’s and starting every new relationship in sync. Communicating with confidence about the roadmap of events a client is due to experience will build trust at speed and put their mind at ease.
When the agency and the white label provider are in sync, everything goes off without a hitch, and the client will never know there is a back-end engine doing all of the grunt work. You cut out wasted time and energy and accrue credibility that will enable you to increase your prices in the future.
#3. Learn how to manage client expectations better
Setting and managing client expectations is part art and part science.
The scientific component is fairly straightforward. You agree on hard metrics – clicks, leads, and conversions – and you periodically work towards those metrics.
But the art is less linear. Supporting the hard metrics of a PPC campaign are an array of often unspoken intangible expectations that you and your agency are being held accountable for.
Mastering the art of setting and managing client expectations is one of the vital differences between successful agencies and ones that churn and burn clients every month.
Here are a few tips for doing so:
- Resist the urge to over-sell the outcomes you can achieve. It’s tempting to tell a prospect everything they want to hear, but you are working yourself into a corner that you may never get out of. In our experience, the best clients appreciate honesty anyway. Often, an honest assessment of the investment required for them to achieve the growth they are chasing will build trust. Sure, you’ll lose a few opportunities. But the ones that stick around will be happier and more fruitful for your business. The secret is to truly understand exactly what you (and your white label provider) can and can’t deliver.
- Collaborate with your white label provider before communicating with the client. Your white label PPC partner will hopefully have a wealth of experience in the industries you are targeting. This experience comes with valid assumptions backed by data. Use this extensive knowledge to form an accurate estimate of the results you can achieve for your client.
- Unearth the unspoken expectations and document them. As we said earlier, there are scientific outcomes, and then there are unspoken expectations that your client holds. The deeper you can dig to uncover the unspoken expectations you are being held accountable to, the more chance you have of reaching them. You may find that a client has lower expectations than you assume, or that they care more about some intangible benefit than they do about the hard metrics you were going to send them. This information is critical in building a long-term relationship.
#4. Improve your PPC knowledge
You don’t need to be a PPC expert, after all that may be one of the reasons you are hiring a white label agency…
But make sure you keep your finger on the pulse and understand the critical information you will be relaying to your clients. Stay up to date with the latest PPC trends, lean on your white label partner for advice and guidance, and regularly check in on how the campaign is performing. Be abreast of the things that may affect your client and proactively communicate these things to them.
This way, whenever your client has a question, you will be confident in your ability to respond with authority. Of course, never make up an answer to a question that you don’t know. Sometimes it’s ok not to know the answer. Simply inform the client that you’re not the technical expert, and let them know you will get back to them in an agreed timeframe with an adequate response.
By portraying your agency as a trusted and highly qualified PPC partner, you build a level of credibility that enables you to charge higher rates and increase your white label margins.
Wrap up
In a nutshell, working with the right white label PPC provider can be a profitable way to scale your agency without the stress and overheads associated with managing staff.
This way, you can focus on building client relationships. Which as we’re sure you know is the cornerstone of a successful agency. People buy services from people they trust, not from soulless organizations.
