How agencies are putting math behind marketing with Eric Vardon

Announcer:

Welcome to the Agency Management Institute community, where you’ll learn how to grow and scale your business, attract and retain the best talent, make more money and keep more of what you make. The Build a Better Agency Podcast, presented by White Label IQ, is packed with insights on how small to midsize agencies survive and thrive in today’s market. Bringing his 25 plus years of experience, as both an agency owner and agency consultant, please welcome your host Drew McLellan.

Drew McLellan:

Hey everybody, Drew McLellan here with another episode of Build a Better Agency. Thank you so much for making the time to join us, I know you’ve got a lot on your plate right now, so I am grateful for your time and attention. Hopefully as you’re listening to this you are on the move, you’re out walking the dog or walking a golf course, but getting some fresh air and giving yourself room, and space, to think about your business in more of a macro way rather than the micro way we’ve all been thinking lately, just in terms of putting out fire, after fire, after fire. I think this episode is really going to get you to think big picture, but I also think it’s going to deliver a tactical opportunity for you, that I believe many of you will find valuable. So I think it’s going to be good on several levels.

Before I tell you a little bit about our guest just a couple quick reminders. As you know we give away a free seat at workshop, one of our live or our in demand workshops, every month and all you have to do is leave a rating, a review, for the podcast. So wherever you go to download the podcast head over there, and leave us a rating and review, and then take a screenshot of it because a lot of times your screen names, SunLover203, does not tell me who you are or where your agency is. So take a screenshot, send it to me by email to [email protected], and we will put you in the drawing. If you’ve already done it don’t worry about it, you are in the drawing and we will leave you there until you win. So sooner or later, hopefully, it will be your lucky month. So that would be great if you would do that.

Also want to make sure you know that we have moved the Build a Better Agency Summit. It was supposed to be in May and obviously with all this COVID stuff going on that didn’t seem like a great plan, so we’ve moved it to November 11th and 12th with the AMI Family Day being the 10th. So if you’re a member of AMI you can come and join us for that half day, and dinner. But for everybody else the full conference is the 11th and 12th of November, same speakers, same sponsors, same opportunity to learn.

Obviously we’re going to be talking a lot about how we explode our businesses into 2021, how we take advantage of whatever we’re going through now and how we’ve repositioned ourselves, the new relationships we have with clients, and how we’re going to leverage all of that in 2021. So it’s not only going to be a lot of learning and a lot of connecting, which by then I think we’ll all be super hungry for, but it’s also going to be a celebration. We are going to celebrate that we survived this, that our businesses are on solid footing. And for many of you it may be a celebration of a reinvention or a pivot. But we’re going to come together, we’re going to celebrate, we’re going to learn, we’re going to be pretty awesome.

So tickets are on sale now. I know for many of you this may not be the time to buy a ticket, so don’t feel any pressure. But if you are in a position where you can buy a ticket, and you know that you want to partake, honestly it would be awesome for me if you would buy a ticket now. As you might imagine things are a little lean in our world as well, but we’re holding the party no matter what happens, so I hope you decide to join us.

All right, let me tell you a little bit about our guest. So Eric Vardon is really a tech entrepreneur. He has been an agency owner, he still owns a portion of the agency he started many years ago, and that agency is called Arcane. It was a digital market and advertising firm, and he grew it from zero dollars of revenue up to about $15 million in six years. But at the end of the day Eric found that really what he loved was he loved creating product and so out of necessity, within his agency, they created something that served them well and now they are offering it to other agencies. And it’s all baked with AI and machine learning. So a lot of you have wanted for a long time to tap into the power of AI and machine learning but a lot of the tools out there just are not really very affordable for small to midsized agencies.

So we’re going to hear Eric’s story; we’re going to hear a little bit about the tool; but more importantly we’re going to hear about what he’s learned, in terms of digital advertising spend, the mistakes agencies make, because of his own experience inside his agency and now that they’re working with other agencies with the tool that I’m sure he’s going to tell us all about. So let’s jump right into the conversation and I’ve got a lot of questions for Eric, so let’s get started. Eric welcome to the podcast.

Eric Vardon:

Awesome Drew, thanks for having me, appreciate it.

Drew McLellan:

So you have an interesting origin story. You’re sort of a recovery agency owner, although I know you still own a piece of it. So tell everybody the backstory to all of this.

Eric Vardon:

Yeah, well I won’t get into the long version but the short version of it is I wanted to build websites. So mid ’90s I took it upon myself, went to school, and took graphic design, which still had … I was processing film and a whole bunch of other interesting things, so I had a fairly traditional background but really wanted to build websites. And so mid ’90s got my degree, and came out and figured out pretty quickly there wasn’t a lot of people building interactive websites, and at the time it was a lot of Macromedia Flash then. And if you remember the really loud noisy websites that everybody built with a whole bunch of skip intros, so that was me. And I was fortunate enough, with a few friends at school, to build a small interactive shop. And we actually did a lot of the execution and production for the big agencies around North America, Saatchi & Saatchi and the Fjords of the world. And so it was a really great in-home agency with a bunch of contractors, and we were just young and building cool things.

And loved the business but really wanted to do more, so had a difference of opinion, where I thought the industry was going and I wanted to focus on more full-service. So I separated from my partners on that and sold my shares. And fast forward and started a company called Arcane in 2010, on the heels of the last downturn when clients were looking for more accountability and more results. And my business partner, co-founder, John and myself said, “What if we could put math behind market and guarantee a return? And show that their investment into market actually was just that, an investment into ROI. And if we could do that they would be addicted to results and hopefully it would remove the subjectivity from our process of advertising.” And that’s ultimately what we did for many, many years and grew quite rapidly. So that’s the short version.

Drew McLellan:

In doing that with your agency though you, in the beginning, did it like everybody else, right? You did it by hand with Excel spreadsheets and what kind of results were you measuring? Was it mostly digital advertising?

Eric Vardon:

So it was a mix of digital and traditional though, so one of our founding partners, Tony, was a traditional media agency guy for many, many years. And so we actually took a majority of his portfolio, that was 100% traditional, and just started to get their feet wet into the digital market side. So we’d slice off a small percentage, starting with 5% or 10% of their traditional media budget, and said, “Well because we’re handling, over here, your flier program, your direct mail or your outdoor, et cetera, let’s just test and see what happens with the digital side.” And we would actually marry the two together.

So to answer your question, Drew, yes it was starting with Google AdWords or Facebook at the time, or whatever the case may be, but we were also starting to measure the effectiveness of their flier programs and their flier drops that are outdoor, on the traditional footprint. So it was, again, in 2008, ’09, ’10 putting URLs and trying to correlate what the traffic spikes were doing at what times. We actually got really dirty into the data, in terms of when media buys were being purchased, and correlating that to spikes in web traffic and sessions, correlating that to lead gen. And we started to really report on cost per acquisitions, across both digital and traditional, and that was really the sweet spot that we hit.

Drew McLellan:

And was there someone on the team that had that analytical background or did you guys have to just sort of self teach? Because, as you know, when you go to school for graphic design math is not a big part of that, right?

Eric Vardon:

That is true. No. Today we split that into our offensive defense strategy, which I’m happy to chat about. So we have four partners in the founding part of Arcane, Bryan is on the other side. So Bryan and I were really on offense and focused on sales, and acquisition, and strategy. And, of course, we would all bleed in. But Tony and John were more on the analytics, the data. John on the development side and managing acquisition, and the reporting, and those kinds of things. And so we did have a nice mix of talent. And so, yes, there was certainly parts of us that were more focused on the analytics side but it was that culmination together, those four corners, that really brought together really interesting growth.

And when you’re sitting across … At that point a lot of our clients were either the leaders or the business owners themselves, to talk solely about what the return is, and the data, and what’s happening to the sales force and the leads that are coming in, and the quality, it wasn’t about the creative; it wasn’t about which tactics we were using; it’s, “Is this working?” “Yes it is.” “What’s happening and can we do more of it?” All of our clients became completely obsessed with the results and it was a fascinating time, in the early 2010 timeframe.

Drew McLellan:

But at that point in time I think, if I remember from our earlier conversation, you guys were also banging your head against some of the things that every agency bangs their head against, mistakes, costly mistakes, things like that, right?

Eric Vardon:

Absolutely. I mean, it became prevalent very quickly as we … Sort of be careful or be cautious for what you wish for because it does come true. And we were compounding with new sales and opportunities at the same time. Our current client base was becoming obsessed with digital and spending more, both on traditional and digital, so we had this compound effect, all while you’re trying to scale and grow the business. So there was leakage in the bucket everywhere, from team members not having enough time, there was no HR, there was no process development. I mean, really it was we started with John and myself, and a couple partners, in basements like the traditional story. Fast forward four or five years later we have 100 people in four offices and doing acquisitions, and just trying to keep up with, then, new data and new tactics. Yeah, there was spillage absolutely everywhere and it became quite unruly to manage, all while trying to grow. We’re seeing our revenue and our top line but our bottom line was actually going in the other direction and that was never something that we intended to happen.

Drew McLellan:

So you’re growing at the top line, your profit margins are shrinking because for all of the reasons you just said, no process, costly mistakes, team members scrambling too fast. So how did you fix it?

Eric Vardon:

Yeah, so we took … As we do with our other clients it’s, “Okay, let’s do some analysis on what’s working, continue to do that. And let’s do some analysis and data dive on what is making our team upset, and where these mistakes are coming from, and where’s the leaky bucket, ultimately, in our margin?” And so we put our own hats on and actually started to build processes, to bring in HR, to bring in a finance team, so that we could actually focus on the business itself. And we found quite quickly that, in terms of the mistakes, and the growth, and the things that were happening, is it was the complexity was a big one. Again, we’re seeing more clients, the complexity and the business acumen that they needed was taking away from us. But our team was growing at the same time, obviously we’re managing more media dollars and more volume at the same time. And so at the same time it was a lot of the reporting.

So we became, at a point in time, after about three or four years into our growth, we were just analyzing data. And we found that our team was not only making the mistakes but they didn’t have enough time to actually execute and change creative, look at the strategy, the content, all of the pieces that we used to really spend a lot of time on, and iterating and changing. That’s where our growth came in. So it wasn’t one thing that would incrementally improve our bottom line, it was really small pieces or small percentages across every part of our business. And I think the main thing that I learned early on, from starting an agency, was I always figured that you had to throw new clients and/or people to generate revenue or profit.

And we said, “Where is the automation for an SMB agency like us, that we can afford, that is going to help us scale and automate our business?” And there really wasn’t a lot. There was many that are the enterprise level but we just couldn’t afford them and so we started to really build our own software, and look at ways to automate our own business, and it was a really interesting learning time for sure.

Drew McLellan:

Yeah, so let’s talk about that a little bit because I think you’re right, I think there’s two ways agencies make money. One is new clients and the other is actually keeping more of the money that they’ve already made. And I think when an agency is small it is all about getting more clients. And at a certain point in time, and I would argue that it’s probably when an agency hits about 25 or so people, all of a sudden now the mistakes and the inefficiencies start putting holes in the bucket. And no matter how much more on the top the client pours in, if it just keeps running out at the same ratio on the bottom, it’s just sort of hamster in the wheel, right?

Eric Vardon:

Yeah, I think the biggest light bulb that we had is working with a consultant, came in and he said something that is often overused, I guess, but for us it was something that was new to hear. It was, he’s like, “You guys need a check engine light.” And I’m like, “Okay, I like cars, I understand it.” He’s like, “You guys are still managing this business in a very old fashioned” … He’s like, “Most of your team” … And he’s looked through our data and he’s working with us, he said, “Look at where all your hours are going, they’re analyzing data all day long.”

He’s like, “Let me guess, when you started the business you were focused on how to optimize to change a strategy, to further enhance what your clients and customers are looking for. Am I right?” And we’re like, “Absolutely.” He’s like, “Well look at your team.” He’s like, “You have to build in ways that the information is coming to them, that the data variances are coming to them. And if you do so you’ll actually probably end up freeing 30, 40, or even 50, or more, percentage of your time. Because now they’re down to actually no time, which the compound effect is they’re too busy, they get stressed, they’re not spending time with clients, they’re not spending time with each other.” And that was a really big eye opener, to your point.

Drew McLellan:

Well I think that gets to the whole idea … When it talk to agencies one of the pain points, that is sort of consistent across the board, is reporting. And I think it’s a combination of, A, how much time it takes but, B, that it’s also always looking in the rear-view mirror, right? So it is what happened last month, and by the time we’re done analyzing it and making changes based on it, we’ve lost 30 days. Or more, right?

Eric Vardon:

Yep. Yeah. And I think for high performance agencies, and this is now because of where we’re at in this world, is it’s going to go from the pendulums. Remember what happened in 2008 and ’09?

Drew McLellan:

Yep.

Eric Vardon:

Clients started to look for accountability. It’s going to go completely flatlined the other way and ROI is an absolute must, it’s flown around a lot and you hear it, but it’s going to become absolutely everything. So not only will digital spend continue to increase but you’re right, the accountability for sure.

I think from a reporting perspective my biggest differentiator in that whole new way to work, and you hit the nail on the head, is it’s like bananas, right? Data just goes bad so fast. And to another point, in terms of our data, was we would spend, on average, 20 hours a month reporting for one client. And I think at our peak we had about 80 different clients. So you can imagine not only are the team exhausted because by the time they finish a report they actually have to start on next month’s report, they send it to a client, account manager reviews it, the client actually looks at it three or four days later, the data’s already bad. It means on both sides nobody’s seeing value.

So to me it’s the mind shift of, “We must have live data at our access.” It’s a very different mind shift and a way to actually have conversations with our clients to say, “I’m going to put the emphasis, and the onus, on you to look at this data and know it. And when I’m going to sit in a room with you once a week, or once a month, or whatever the cadence is, you want me to sit there and talk about strategies and ways to optimize. ‘Tell me what happened that was good and bad, tell me how we pivoted and changed, and effected it. And then let me know what we’re going to do next.’” That’s the value of the agency relationship, not spending my hard earned dollars to the agency to spend and make frustrating reports that nobody’s going to look at.

That’s the new way to work that I think will probably be the biggest shift for us. But we went through it and dragged the team through the mud, and we came out of it the other side. And the refreshing part is that the clients become so excited to have this data at their fingertips that they look at value of the agency in a very, very different way.

Drew McLellan:

Yeah, because now it’s actionable, right? Now it’s like, “Here’s what happened yesterday or last week, I can pivot today and put more gasoline on that fire, put less gasoline on that fire because that doesn’t seem to be kindling right now.” So it is much more actionable.

Eric Vardon:

It’s actionable and I think the next phase will be … Especially with the automation and AI, and this now comfortability … There’s already this shortage of skilled and there’s going to be a change with that, which it will be interesting to see as we come out of the situation that we’re in right now, but automation still will be … Humans are best at creativity, we’re best at the strategy side, we’re best at understanding and correlating the data but there’s going to be way more data for us to actually review. So, again, it’s just the shift of the time and the hours that we have. We must look at automation and tools that are going to help us, but they’re going to start to actually tell us how to modify, how to change, and how to optimize. And I think that will be then that next phase, which is hopefully going to provide more protection but also more time and effort for the team members that we’re paying a lot to keep on our payroll, for sure.

Drew McLellan:

So for you guys the solution, and it makes sense given your background in web dev and development, was, “This isn’t working, we need to develop a tool,” right?

Eric Vardon:

Correct. And I think it was, as I sort of mentioned earlier, there wasn’t one glaring area of our business that was saying, “Okay, this is where the biggest hole in the bucket is.” It was actually in a combination of many and I think that’s ultimately how we started to build our software. And early on it was a landing page tool, so that we could actually deploy landing pages so that we could optimize more quickly for our clients. We built a framework so that we could actually launch and deploy full websites more quickly, so that we could turn on campaigns quicker. Ultimately we went through department by department and slowly looked at ways to just incrementally help each department automate parts of their job. And that’s where the software of Morphio really was born from at the time.

Drew McLellan:

So let’s talk about some of the holes in the bucket that you identified. And then I want to talk a little bit more about the tool and how it solves, or plugs, those holes.

Eric Vardon:

Sure.

Drew McLellan:

What were some of the places where revenue, where profit, was sort of leaking out of your bucket?

Eric Vardon:

Yeah. Yeah. I think in our days of rapid scale there was a … The big one was tracking and management of data. And so you spend a lot of time going through creative process of videos, of campaign, and building, and writing, and landing pages, and website, all to put money behind a campaign that’s going to be published to go to the traditional funnel, however it looks, keep it simplistic. But generally there’s some kind of a conversion, either a lead, or their online sales, or some sort of webinar download. Whatever that conversion is doesn’t matter, but we found that tracking that attribution all the way became almost impossible to manage. And everything’s last minute with a campaign and something would break. And it could have been one day or two days. And I remember it was one of our largest campaigns and we lost about three, four days of data. We didn’t know it until the third or fourth day. And you can’t recoup that.

And so all of a sudden we have this national campaign and we lost four days of the initial data, which is generally the most key because you’re making all of your future tweaks and decisions, for a very seasonal product, on this. And we couldn’t recoup it. So all of a sudden you have an unhappy client, you have a relationship that could be tarnished. And we were able to save it but you have doubt within the relationship. So that sort of dead, incorrect, broken links or attribution was a big one.

I’d say number two was credit card and payment failures. Something that often you don’t find until, again, hours or days later. Sometimes you don’t know, whether it’s not our mistakes or the clients, or some would build something extra they don’t know. All of a sudden you have a campaign that’s paused, for even two or three days, and you’re looking at a loss of revenue.

And then I think another one is ads that are flagged or disapproved was a big one as well. Like all of these things came into uncertainty and doubt in the client/agency relationship, were things that just shouldn’t happen and where does that usually come from? It’s usually the founders’, owners’, pockets. And think about how much we have to sell to recoup five or ten thousand dollars in profit is a whole nother ball of wax.

Drew McLellan:

Yeah, those are the conversations you absolutely do not want to have with a client, right?

Eric Vardon:

Those are not fun phone calls, no.

Drew McLellan:

Because it looks … They don’t understand how complex it is, so it just looks like negligence on our part, when we have to have those conversations.

Eric Vardon:

And I think it has gotten better and I think that shift to a younger management workforce, that is in the weeds, that understands the tactics, has allowed for some acceptance of this. But we always say there’s optimization, there’s testing, failures can happen, mistakes can’t. The sooner we can catch a failure before they become the mistake is not only the new norm but, again, the more complexity, the more tactics, the more ads, the more clients, the amount of failures will only continue to increase. We need to manage the amount of mistakes in the other direction. That’s our biggest advantage as agencies with technology.

Drew McLellan:

Yeah. Well and I know you did some research, and you talked to other agencies, about the … Sort of were the mistakes you were experiencing the same mistakes every other agency was? And one of the statistics that floored me was that 60% of the agencies self-reported that they were identifying, so who knows how many actually happened-

Eric Vardon:

That’s right, yeah.

Drew McLellan:

… but they were identifying more than six mistakes a week, which calculates to over 300 mistakes a year.

Eric Vardon:

And I think, just to confirm for everybody listening, that those respondents, 90% of them, are the executors. So I think there was only about 9% or 10% that were founders, or leaders, which means this is the heart of your team. These are the ones that are … As we know very well, they’re busy, they’re overworked, they’re tired, they’re stressed out. Why? Because this stuff is really hard to do.

Drew McLellan:

Right.

Eric Vardon:

In many cases one-

Drew McLellan:

And the consequences are huge.

Eric Vardon:

They’re huge and relationships can’t go back, so I think that was a big one for me. I was surprised at that. And as an agency owner I know how many mistakes we make and I do separate them between a failure versus a mistake. That floored me as well. But what I loved about the numbers that came back, again, it was of all of the mistakes that were listed; the credit card failures; the broken pixels; again, ad disapprovals; broken tracking; incorrect links; some of the things I had already addressed; they were all in that 30% range, which spoke to me and made me feel very good, at least for a few minutes, to say, “That’s why we built this thing was because it wasn’t one thing. I don’t have to throw clients and people at a problem anymore. Maybe I can solve this incrementally.” And that made me feel pretty good.

Drew McLellan:

Yeah, I can’t tell you how many times I’ve had an agency owner call me just ready to blow a gasket because somebody left a campaign on and it racked up 30 or 40 thousand dollars worth of ad spend, that they couldn’t go back and ask the client for. There’s pressure points on both sides of this. There’s pressure points on the folks doing the execution because it’s labor intensive hard work. And I’m sure the pressure to not make a mistake, because the understand the consequence of that mistake, is huge. And then on the agency owner’s side, as you said, it is literally coming out of the agency owner’s pocket when a mistake like that happens. And so instead of a profit margin in double digits you’re looking at a single digit profit margin because these mistakes are happening every single day, at some level.

Eric Vardon:

Yeah. And for the agency owners that maybe aren’t as technical or in the weeds this stuff, again, it’s very, very hard. It’s a rabbit hole of complexity and technology that is changing every single hour every day. Facebook, Google, our friends at Microsoft, Shopify, you name it, they’re all making updates, improvements, changes to their own complexity that we have to keep … Sometimes it is completely out of our control but yet, you’re right, the stress usually goes on the executors. You go back into the ’90s, before antivirus was around, we used to take this for granted and now every single PC out there will have some kind of an antivirus to make sure that we’re catching things before they destroy our computers, our files, our livelihood. How can we not have the same kind of approach for our most precious investment, which now is in market leads and sales, and in data?

Drew McLellan:

Yeah. Yeah. So I want to talk a little bit more about the tool that you built but first let’s take a quick break. And then we’ll come back and talk about the solution that you guys built for yourselves. And then how that really pivoted, for you, your whole business model. So that’s what we’ll jump into when we come back, but first let’s take a quick break.

Hey guys, sorry for the interruption, but I want to tell you about a workshop that we offered in 2019 that was so amazing we are offering it again twice in 2020. So the workshop is called Sell With Strategic Insights. And it was the brainchild of Robin and Steve Boehler from the Mercer Island Group. And basically it was born from the idea that when they watch agencies pitch one of the things they’re not seeing is a lot of strategy or the agency may have had a strategy but they didn’t explain it very well. And agencies, good agencies, are losing in those pitches because they’re not articulating a really strong strategy.

The other reason why we’re doing this is because one of the things I hear agency owners say all the time is that you are the bottleneck in your shop. Because you’re the only one, or maybe you have one or two other people on your leadership team, who can really think strategically for both your existing clients and for biz dev opportunities. So we put together this workshop to teach you a methodology, that you absolutely can take back to your shop and teach everybody in your agency, that will allow you to approach a current client or a prospect with an amazing strategy that really grabs their attention and makes you look very different from everybody else.

I will also tell you that of the 100 agencies … Well it probably wasn’t even 100, because a lot of people brought more than one person. So let’s call it of the 70 or so agencies that took a workshop in the last two sessions, those agencies have reported over $39 million of new AGI that they absolutely can credit, based on the clients’ comments, to using the methodology that they learned in that workshop. Again, $39 million.

Anyway, this workshop’s going to be in August in Chicago and in January of 2021 in Orlando, Florida on Disney property. Check it out on the website. Again, Selling With Strategic Insights. I highly recommend it. It’s really amazing and it really can change how you, and your agency, approach and deliver strategy for clients, and prospects. All right? Let’s get back to the show.

All right, I am back with Eric Vardon and we’re talking about some of the struggles his agency had around tracking the work they were doing for clients, being able to see data and results quickly enough that they could pivot, and also avoiding all of the mistakes that sort of leak profit out of an agency’s pocket. So right before the break you were leading up to the part of the story which was you finally created a solution, which is now a software as a service tool. So tell us a little bit about the solution and what it did for your business.

Eric Vardon:

Yeah, so let me tell you through a story. I remember one of our first trial users, and before our system was automated where you could … Before you could go on and do a [naz now 00:30:47], you could do a free trial, and plug and play, and follow some videos and onboarding on your own but we used to really manage some of our early adopters. And it was a fantastic agency owner who plugged in Morphio, I spoke to him about three days after he put in his free trial, and he said, “Eric I got to tell you, you saved me from about a $300,000 mistake.” And I’m like, “Perfect.” And this was actually before we got into the whole market security and it was part of why these stories actually led to this whole antivirus market security sector that we’re in, which I’ll talk about happily. And he said, “I just launched a campaign, I have this huge client. They’re a large multi franchise, it’s a new account, so I put Morphio on it just to see what would happen.”

This was on a Thursday, Friday morning he wakes up, he got his anomaly alerts in Slack, as well as his email. Basically it flagged him and said, “You have a broken tracking problem.” So he calls up his dev team, going into the weekend, which he normally wouldn’t do and assume that all things are firing. He’s spending a lot of money on behalf of this client.

And so Friday morning he calls his dev team and they had messed up the tracking for the campaign. They actually had doubled it and so their data was not correlating. And he’s looking at it going, “What is this? I have to go into a board meeting with this new client on Monday to report on this successful three day campaign, which for them is their peak time of the season.” He’s like, “I was able to, by 1:00 in the afternoon of Friday, fix the issue.” He’s like, “If I didn’t have this tool it would have been Monday morning, I would have woken up and I would have had a report from my team with nothing in it, and I was supposed to go into a board meeting an hour later.”

So that’s one really small example of integrating all their major stacks and being able to get into the weeds, but being able to have something in the background that was making sure that their data and their campaign was leading up to the success that they had hoped. It’s just one way I’ll tell in a bit of a story.

Drew McLellan:

So what does the tool do? What did the tool do for you and your clients? And then we’ll get into how and when you decided to offer the tool to other folks.

Eric Vardon:

Fair enough. Yeah. Again, just the major pain points for us, as we were getting into it, again larger campaigns that were scaling; larger clients with more demands; we’re putting out a lot of fires. And so the thing that the tool did was allow us to automate the process. So we basically, as we would, set our KPIs with our clients. Let’s, in this case, say it’s $100 cost per acquisition. We would tell our software to look at all of the campaigns and make sure that we’re equating, on pace, to this $100 acquisition. And if anything would fall outside of that then flag us, send a Slack, send us an email, send a notification to our team. And so this is a whole representation of a new way to work, because traditionally they would be logging in every day out of analytics, in and out of Google Ads, and Facebook, et cetera. And on the fly remembering that client’s cost per acquisition, correlating it. And if they didn’t get busy or flagged and pulled in another direction they were looking at their morning as this over analysis to ensure that that acquisition cost was being met.

And so that’s ultimately what our tool started to do, was flag that information. So smart enough to tell it what to focus on and anything that would fall outside of the norm tell our team, so then they would know what to prioritize, what to actually go in and look at, and change. And so saving hours every morning, across 80 some-odd clients, was really the correlation of why we did it.

Drew McLellan:

And how did it change reporting for you? Because again, as we talked about earlier, that is a huge pain point for agencies. They are not even confident the clients are looking at the reports, because again it’s rear-view mirror data. They’re spending weeks of agency staff time to develop the reports, they don’t know … They vacillate between doing the executive summary level report or the deep dive report. So how did it change reporting?

Eric Vardon:

Yeah. And I think this is a constant battle but back to my whole notion of live data. So we did things in two ways, and I can also talk about where we’re taking it now, but it was provide a different mindset. So create a shared URL that has all their KPIs in realtime, that they can go back six months; they can see where the budget is tracking; they can see exactly where all their KPIs, month over month, in terms of their data flow from start to end; and they could just refresh this URL. And every day they would have access to their little black book of what’s going on across their entire platform, so we started with that. That was a huge time saver because, again, we put the emphasis and the onus on them to look at that data.

Then we had to reset expectations to say, “When we meet with you we’re not going to look at the previous data. You are happy to ask any questions, but we’re going to come in and tell you what happened, why, and then how we’re going to improve on it.” And then we started to get into offering a weekly report. And automated in their inbox every Monday, that would say, “Here’s what happened last week, based on the goals that we agreed to.” And then where our pace was for that week. And so that would come into them every Monday morning, so they knew what happened and what to expect.

And so that was really how we changed the mentality of reporting. And we have a whole bunch of, obviously, new ways and opportunities to take it. But it’s probably the biggest part was, “Don’t ask me or wait for that report to come in my email, that is static. Now you have to look at something and we may have to communicate on what these KPIs are and some of the more core specifics.” But once they get a hang of it now they have access to the data at their fingertips.

Drew McLellan:

And did you find … Because what I hear from agency owners are that clients don’t read the reports and even if they’ve gone to an off-the-shelf dashboard, or something like that, most clients don’t look at the data or they don’t understand what they’re looking at. Did you guys find that to be true as well? Was there a big education component for you, in terms of helping your clients recognize the value of looking and understanding what they were looking at?

Eric Vardon:

Well I think we tried to synthesize that into … Probably I think there was 10 core KPIs. And these are just normal business KPIs that if you have a client that doesn’t know what their cost per acquisition should be or what their lead targets will be, or et cetera, then that may be a whole different problem. But I think what happens normally with agencies is they’re reporting on all the channel data detail. What happened in Facebook? What happened in Twitter? What happened in Facebook? Clients don’t care about that. They want to know how it’s going to effect their bottom line and that’s definitely the shift of we wanted to create one source of truth that as a business owner, CMO leader, would be able to look at and say, “Is my cost per acquisition going up, down, so and so forth? What is my acquisition goal? What is that cost and how am I trending to it?”

So it definitely is more of an emphasis on what a business owner, leader, manager, would see. We know they don’t care about what the Facebook ad spend is. If they want to dig into it they can, that’s a very small subset. It’s built in a way for business leaders to actually ingest where their market investment is going and not to look at the specific tactics.

Drew McLellan:

Well I think one of the truths about all of this is that people will look at, and care about, the data that they’re given. And so if the best data they’re given is, “Here’s what happened on Facebook this week with your ads,” then all of a sudden that’s what they care about. But the reality is that’s not what they should care about. They should be caring about leads, lead scoring, cost per acquisition, all of that. But if we have no way to give them that data then they all of a sudden start nitpicking into the data we do give them.

Eric Vardon:

Well and that actually represents probably the biggest area of tenseness, I guess, whatever the terminology is but yes. So our beloved and my fellow nerds, we love channel data but we also fall into, “I want to do a little bit better than yesterday but I want to make sure that I look good.” And there’s nothing wrong with that. It’s harder to go up and be confident with a business owner of a two million, five million, 50 million dollar business and talk about acquisition costs. That is not always as easy to do. We as agency owners may be a little bit more comfortable about it. So we actually have to come together and really understand what those KPIs are. And there’s nothing wrong with reporting on channel data and sometimes it actually is really relevant because it does impact everything up and down, right?

Drew McLellan:

Sure, right.

Eric Vardon:

But I think there is definitely a separation of accountability, with the executors launching the Facebook campaigns and how that they can translate that into a cost per acquisition. Now that, to me, is the big shift. That tools like ours definitely are focused on KPIs that business leaders matter, but we know that the executors are there in the day to day. That is definitely something that we’ll have to focus on. I think that’s just the shift of agencies, but we all have to get together and understand the KPIs that we’re reporting to clients.

Drew McLellan:

Well and I’m pretty sure the average CMO is not being asked by the CEO or the board, “Hey, tell us how our Facebook ads are going,” right? I mean, so really I think what your tool is doing is it’s equipping the client to have more intelligent, and reputation saving, conversations inside the organization because they look better when they too can talk about the business KPIs.

Eric Vardon:

Yeah. And the other layer is for some of us that are large enough to have an accounts team the accounts team lives in the middle of that. And there’s another layer, then, of they’re the face of the client. They know what the acquisition targets are, et cetera, but they’re also not channel experts, but they’re not the agency owner.

Drew McLellan:

Right.

Eric Vardon:

Right? So they’re actually spending a lot of time pulling time and hours from the executing team, or the strategy team, the Facebook team, whatever the case may be. And they’re not experts either and so that provides another layer of issue that we hope our tool can provide, is trying to bring all of these … And it’s a crazy social change movement on it, but when you actually have all things firing with that, and the accounts team is learning why their Facebook spend is going up and down, and how did the campaigns effect that? That they can then actually translate that to the client. There’s another layer of accountability there that I think we will all relish in. It’ll take some time but of course that’s another challenge that we have faced in the account side too, that we’ve overcome.

Drew McLellan:

And I know that the tool has evolved dramatically from when you first developed it, but what was the shift, in terms of the execution team? What was the shift in what they were doing to what they were able to do? And how did that impact your agency’s bottom line, once the tool was implemented internally?

Eric Vardon:

Yeah. So I would say that answer will differ. When we first started with the idea and when we first built it we actually grew at the same time. And the complexity of the tool changed, and the needs of the tool changed, but we actually … In its current state it does serve both small consultant shops with a couple people that have a great work/life balance, that are still in the tactics, to small agencies that have five, 10, 15 people; and then agencies that can sour up to 50 to 100. It really does depend and so there’s different ways I would answer it.

But I think specifically, to your question Drew, it’s that one of the biggest pieces for us was providing alerts for our team and having a sense, in the background, that something was keeping an eye on the data alongside of them. That’s probably the biggest shift, that mistakes and failures, again, they can happen in tandem but now I have something in the background as a bit of a fail-safe, whether I go sick or I’m on vacation, or I have a campaign that’s new, or a new client that I need to spend more time on. The complexity, the failures, mistakes, the challenges, the new campaigns, the changes, all the things that come with it we now are able to, or were able to, provide some support to our team. So that’s probably the biggest way that the mentality shifted.

We also wanted to build in some ways that … Again, like most agencies we have multiple tools within our stacks. So like an SEO, for example, we have three or four, from Ahrefs, to Semrush, to Screaming Frog. But they’re also were things that those tools didn’t allow us to do, so we built in some features that were different and unique, so that our team could actually build out their stack and have complimentary tools to do certain things that otherwise were really hard to do. So it does differ depending on the agency side but I think the main point is the idea that something is protecting our digital market executors, in a way that they didn’t have before. That’s probably the biggest shift.

Drew McLellan:

So what did the conversation look like? You built this tool for yourselves, it was working, the agency was more profitable. I’m sure it helped you sell and earn new clients because you could show them amazing case studies with realtime results. So when or how did the conversation go, “You know what? We’re not busy enough, we’ve got to offer this to other people”?

Eric Vardon:

Yeah. I think we realized, my founders and I, that we are entrepreneurs first, we love building product. And we decided in 2017 that we would step aside from the day to day operations of the agency itself. So at that point we had a VP of HR, Human Capital, take the reigns as CEO. We also had a fantastic finance VP that took the lead of COO. And that sort two-in-the-box scenario allowed us to coach them to be the agency owners of the future, to do the things that we couldn’t do, to build process. Again, we have an HR person turning into a CEO and a lot of times people are like, “Well why would you do that?” Well think about our most core asset in a service-based business is our people, a young workforce that has never worked, in many cases, for anybody before. And so Lindsay, with her very long tail enterprise, very large corporate HR background, to come in and say, “I’m going to help these people really understand and thrive,” to a finance person who started to grow within our operations to become a fantastic marketer.

So that allowed us to have time to do what we do best and what we love, which is build product and really make a mess, and hopefully get out of the way and let someone else kind of clean it up. But really, ultimately, we love building tools. But to me I have this … Being in the agency world for a long time I became sort of obsessed with the conversations that I had with other agency owners going through all of the things that we dealt with when we were 10 people, and why we started to build this tool, to when we were 80 to 100 people, and the different nuances and changes that the features of the tool will allow us to do there, and everything in between. That became my passion, to go out and help other agencies solve those issues because I really do think we need a new way to work. It’s a fantastic, fun, creative, unbelievable business that everybody needs. Why can’t it be more profitable? And why can’t it be more automated, so that we can actually do more of what we love?

Drew McLellan:

Yeah. I think some agency owners bristle at the idea of automation. I think we take great pride in putting our fingerprint on our work. So talk a little bit about where automation plays in all of this and where the human capital plays in this. Because I know, for you guys, it’s not about automating the whole thing, it’s not a set it and forget it tool, it’s really a marrying of the best both, right?

Eric Vardon:

Yeah. I mean, first and foremost humans … There are just certain things we are best at. We can’t compute as quickly and as effectively as machines can with massive amounts of data. Nobody is going to argue that. So there’s a fight as to, “How do I get there? And how do I consume it and understand machine learning or AI? Or what does this all mean?” Every agency owner needs to at least have some comfortability. At the end of the day it’s just taking data and making decisions with it more quickly. That’s profit, right?

I think there’s this scariness of the robots are going to take over and all these kinds of things. I look at it as to say, “If I could free up my most expensive, the team that I love, that I’ve hired, that I’ve brought in, that I know doesn’t want to sit there an micro tweak budgets or campaign ads and copy all day long, would they rather be more enjoyable in front of a client with strategy, or time on strategy, or time on execution?” Absolutely. Hours are finite, we only have so many of them. And every agency owner that’s listening to this has probably heard, “I’m too busy. I don’t have enough time. I’m in meetings all the time. I don’t have time to work. I don’t have time. I don’t have time.” We have no other option. And it’s only going to get worse. There’s only going to be more accountability, there’s only going to be more budgets swinging over to digital, there’s only going to be more complexity, and that’s all going to happen at the same time. It’s only going to get worse.

So the only reason I got into this notion of accountability, like you said, is I’m a graphic designer by trade. I love strategy, now I am terrible with numbers and I’m not allowed to go on the defensive team. I failed grade 11 math, not once but twice, and I joke about it all the time. I said it to a room full of accountants a couple weeks ago. They thought it was funny and now I’m leading this AI team. But I’ve done things to solely get out of the subjective world of creative, so that … And I always use this analogy, I’m rambling a bit, but you bring a plumber into your home to fix your toilet, you don’t tell him how to do it. But in our business it’s so subjective that I was frustrated with why was somebody telling me how to run, or change, or create a campaign? Just let the data work and if it doesn’t let’s change it.

So to me, when we employ automation data and machine learning, we can actually enable more creativity. We can enable humans to do what we do best, which is be spontaneous, and fun, and creative in exercise. So I think the outcome of all of this is actually going to be more time for creative and more accountability, and hopefully more agencies and more focus on the value proposition that we bring.

Drew McLellan:

We’re recording this on April 10th. I find that as I’m recording podcasts during COVID I have to timestamp them, right? So I’m sure there are a lot of agency owners today who are like, “You know what? I would love to shift from a service model to a product model and do all of those things.” So I want you to talk about the tool, but before we get into that I just want you to talk about what’s life like and how is it different for you, now that you’re not day to day in the agency as much anymore, and now that you’re really on the product side? What has been the shift for you around that?

Eric Vardon:

Well we started out in the service business to build product. This is what we always wanted to do. We just so happened to do so in a service-based business like market. And then we quickly realized we needed to shift service of agency into agency and product. And I think now we’re all going through that. And I think to your point is more than ever we have time, we have a little bit of freedom, yes there’s more stress and it’s harder to close leads, and all those things that come with it, but also all of our clients are going through the same thing.

So we, as agency owners, are going to be forced to have different conversations with different terminology, with different strategies. I don’t think we have a choice. We’re all going to be forced into being half product, whatever that percentage is, half product, half service. Some of us may be comfortable with more, some may be comfortable with less. But there aren’t going to be many clients that don’t want accountability and ROI from anything that we’re producing. The days of flier programs or creative posters only, or those kinds of things, I think they’re going to go away. I really do believe that. So however each of us, that are listening, lives within that balance, completely up to everybody, but there’s going to be shift so you’re going to need to know more things than you have before; you’re going to need to know growth hacking; you’re going to need to know, and be comfortable with, some sort of automation and machine learning. Be careful what you invest in, make sure they are proven technology, make sure they have LinkedIn and backgrounds, and they have a team because there will be a lot of smoke and mirrors.

Drew McLellan:

Sure.

Eric Vardon:

But we are going to have to adapt on 100%.

Drew McLellan:

Yeah. So now tell us a little bit about the tool, because now you are offering the tool. I’m assuming at some point in time you went, “This works pretty well. I bet other agencies would like to have this too,” and decided to shift to now offering the tool as a product?

Eric Vardon:

Mm-hmm (affirmative).

Drew McLellan:

So talk to us a little bit about when an agency … What is an agency looking for and what does this tool do for them? And how do they learn more about it? As we’re wrapping up our conversation I’m sure there are a lot of agency owners, and leaders, listening to this conversation saying, “I want all this stuff he’s talking about. I want to make less mistakes. I want to plug the holes in the bucket. How do I get to this tool?” And you guys have a very unique philosophy. Early, early on in our conversation today you said you went looking for a tool like this. And what you found was there were tools that did some of the things that you wanted them to do but they weren’t affordable for a small agency.

Eric Vardon:

Yeah. Yeah. It was very frustrating and I remember that conversation with John, and that’s ultimately why we built it. So to answer your question you can always go to Morphio, M-O-R-P-H-I-O, .AI and do some digging. But ultimately it is a new way to work. I think it’s agencies getting into this … This whole check engine light is a good little analogy to say we used to check our spark plugs, we used to kick the tires before we’d get in our car and go for a drive, and now we get in and it tells if our oil is low or the tire pressure, or whatever the case may be. I still think the majority of us need to at least put that mindset on. That’s the biggest thing, the takeaway, for me is I need to just have a different way to work. I need to free up the time for my people.

What the tool does, I won’t get into all the nerdiness of it, but you’re right, an affordable tool. You can start out as a small agency with three clients or three accounts for $39 bucks a month. It’s not expensive. It’s meant to allow you to not only have something that you can afford but we want our clients and customers to make money from our platform, if they can, and many do. Not only are they saving time on reporting … There’s lots of features, reporting is a big pain point for sure. Allowing access for your clients to log in or to preview their data, so that the emphasis is on them, is part of the new way to work. But we also have many that are charging for that as well, and so they’re saving time and hours, they’re providing more value, the clients happy to pay for it because they have this access that they didn’t have before. That’s probably the other big takeaway of where we think AI can really help.

Drew McLellan:

This has been fascinating. I appreciate you coming on and talking about the journey. I know Morphio’s birth came out of a lot of pain points for you with clients and I appreciate your candor around that. If folks want to learn more about … I know you gave the URL, so we’ll include that in the show notes, but if folks want to reach out to you and have a conversation with you what’s the way for them to do that?

Eric Vardon:

Yeah, absolutely. Well LinkedIn, you can just look up Eric Vardon, E-R-I-C V, as in Victor, A-R-D-O-N. My email is E.Vardon, V as in Victor, A-R-D-O-N, @Morphio.AI. Happy to talk any point in time. There’s also a webinar that I recorded on our website too. If you wanted to just pull up the webinar and learn about the why, be happy to do that too.

Drew McLellan:

Yeah, we’ll include that link as well in the show notes. Any last thoughts for agency owners, in terms of how … Because you’re talking to agency owners, like I am, every single day. So as you look in your crystal ball, and as agency owners across the world are strategizing how to come out of COVID-19 strong on financials, good footing, thoughts? What you’re seeing agency owners thinking about doing or recommendations you have about how we can come out of the gate big, bad, and strong when all this passes by us?

Eric Vardon:

Yeah. I think that … And I’m optimistic that over the course of the next few weeks we’ll catch this quick enough that it’ll actually be more of a boom, and we’ll see the economy spike back up. That’s my hope and I think that’s what will happen. I can tell you from the data already that the adoption of digital across the majority, whether they’re essential or not, the conversations I’m having with agency owners and the calls they’re getting around, “I need to hyper drive my digital strategy,” there will be an influx into our business in accountability, and an adoption of digital and online that we’ve never seen before. That will happen. It’s not even a guess, or a story tell, or a fortune. It is happening already and we’re seeing that in the data, so let’s get ready for it, which means now is the only time we have. We have time to talk with our team, and look at processes, and test new tools, and try new things. So imagine your business skyrocketing and hopefully gaining more business.

They’re going to be different conversations, which also we have to prepare for. The more time we can spend now getting ahead of it and talking with our clients, preparing them, learning and educating, the agency owners that are listening to this, many that I’ve talked to, that’s where they’re spending the majority of their time. Those are the ones that are going to thrive and succeed. But it’s going to take some learning, and some testing, and trying new things. So happy to help anybody and chat any time.

Drew McLellan:

Yeah. Awesome. Thanks for being on the show, thanks for sharing your story. And appreciate everything that you had to teach us today, so thank you.

Eric Vardon:

Thank you Drew, appreciate it.

Drew McLellan:

All right guys, this wraps up another episode of Build a Better Agency. I will be back next week with another guest. A huge shout out to our friends at White Label IQ, as our presenting sponsor they not only help us make sure that we can put the show on but, more important, they help a lot of agencies with white label dev, design, and PPC. Great people, I’ve known them for probably two decades now. Good, good people who take good care of their clients. And if you want to check them out and learn more about what they do head over to WhiteLabelIQ.com/AMI because, as I have told you before, they have a special deal there just for you.

Just a reminder we have moved the Build a Better Agency Summit. It was supposed to be in May. We are now scheduled for November 11th and 12th. Same great speakers, same great sponsors, same great opportunity to network and connect but now it is also going to be a huge celebration. A party that acknowledges our survival, our thriving through the crisis, and looking at new opportunities and new ways to do business, so would love to have you join us. You can go over to the Agency Management Institute website and register today. We have about, I would say, 75 tickets left, so we would love to have you join us in November and I hope to see many of you there.

All right, I’ll be back next week with another guest who will help you think a little differently about the business. In the meantime you know how to track me down, I’m [email protected], and I will see you next week. Thanks.

That’s a wrap for this week’s episode of Build a Better Agency. Visit AgencyManagementInstitute.com to check out our workshops, coaching packages, and all the other ways we serve agencies just like yours. Thanks for listening.