Growth. For every company it’s a constant goal. However, more growth does not always mean a company is becoming more successful. Sometimes companies are blinded by the objective of expanding their operations and pay less attention to the areas of their business that can drive sustained success.
“For us, growth stems from increased total profits, and that has been made possible by a clear focus on automation and digital solutions such as Smart Bidding,” says Patrik Segersven, head of paid search and analytics at Swedish agency BlueBird Media. Together with Magnus Dahlquist and Henry Mäkelä, he founded the agency just three years ago, and they are already competing with some of the biggest in the agency landscape.
But how do they bring that same focus to their clients? According to Segersven, it’s all about building a relationship that lasts. “We choose to be a long-term partner rather than just work with our clients on a project basis,” he says. “It allows us to look at the bigger picture, and that’s necessary if you want to drive sustainable growth.”
Read on to learn how BlueBird Media:
- Drove sustainable growth through more efficient bidding
- Realised the true importance of getting executive buy-in
- Helped one client operate with greater efficiency in a pandemic
Know where to put your growth efforts
One of the agency’s clients is Swedish kitchenware retailer KitchenTime. Like many startup e-commerce companies, they were focused on total revenue, while focusing on profit would allow them to achieve the growth they desired much more efficiently. “KitchenTime was really struggling to get profitable results from Google Ads because they weren’t bidding in the right way,” explains Segersven. “Instead of bidding for profit, they were bidding for topline revenue based on cost per acquisition (CPA) or return on investment (ROI).”
Based on the results that were driven pre-COVID, KitchenTime was able to operate more efficiently throughout the pandemic.
The initial approach wasn’t a huge surprise to BlueBird; many marketers bid for revenue with Google Ads as it helps to increase market share. However, by focusing on gross profit after advertising spend, BlueBird Media can now factor in shipping costs and average order value while calculating KitchenTime’s bids. This approach has seen cost of sales (COS) fall by 30% and topline revenue increase by 24%.
With 40,000 products to account for, automation also played a major role in making the process more efficient — from analysing data in Big Query to Smart Bidding on Google Ads, and reporting with Data Studio.
“Instead of a focus on growth and expansion at the expense of the bottom line, this move allowed us to focus on helping KitchenTime grow sustainability and profitability throughout every aspect of their business,” says Segersven. The shift in focus paid off with a 71% year-on-year increase in gross profit after advertising cost.
Having leadership on board is key
Despite being a relatively new approach, getting buy-in from KitchenTime to optimise for profit was relatively easy because of the CEO’s background in performance marketing. But it’s not always so straightforward as clients can be reluctant to re-prioritise their objectives.
In a time when many companies are dealing with budget cuts, having a clear focus and prioritising the areas that will drive sustainable growth is particularly important.
“Companies often focus their measurement on purchases, revenue, or web traffic, and convincing them to do things differently can be challenging when they can’t visualise the final impact,” explains Segersven. But with executive buy-in, it’s easier for those companies to switch objectives, because the practitioners know they have the support of leadership within the organisation.
Getting executives to the discussion table is one thing, convincing them is another challenge. BlueBird Media’s approach is to ‘kill them with data’ according to Segersven. By this he means demonstrating a thorough understanding of potential clients’ key performance indicators (KPI) and revenue goals. “You then adapt your own marketing KPIs and skillset to fit the needs of the business, which makes it a lot easier for you to build a case for C-levels,” he adds.
Operate more efficiently in a time of crisis
By building a repeatable growth strategy through more efficient bidding, BlueBird Media set KitchenTime up for long-term success, even when the pandemic abruptly changed the industry. “COVID-19 further amplified the benefits of our approach,” says Segersven. “Based on the results that were driven pre-COVID, KitchenTime was able to operate more efficiently throughout the pandemic.”
This was made possible by utilising insights from the new data, which told them not only which products were profitable, but also which products they would have trouble keeping in stock due to the crisis. Instead of continuing to advertise these products, resulting in shipping delays and unhappy customers, KitchenTime proactively stopped offering them.
In a time when many companies are dealing with budget cuts, having a clear focus and prioritising the areas that will drive sustainable growth is particularly important. Durable client-agency relationships will go a long way to achieving that.
3 takeaways to drive sustainable growth
- Make profit your primary performance metric and bid to profit to take all factors into consideration in your digital campaigns
- Get senior leadership buy-in through showing a thorough understanding of potential clients’ business model, objectives, and profitability constraints
- Use data such as stock levels and return rates to operate more efficiently, even in times of crisis