The Raw and Real Story of Building a Thriving Agency

Hey, Ramit. Thank you very much for having me on the show, by the way.

Yeah, that’s a great sort of segue into this entire conversation. Right? So where do we begin? I never did well in school. Okay. So I got kept back in high school, almost failed out of college, and I was never good at school. Okay. However, I was, I have ADHD, by the way, so I’m good at what I put my focus on, but I’m really bad at what I don’t put my focus on. So growing up, I always had an entrepreneurial mindset. I was number one in a lot of these old strategy games. Warcraft, Starcraft. I don’t know if you know what those are. I won a bunch of poker tournaments. So I’ve never really had a real job until even after college. So graduated college, right? Didn’t know what to do with my life because, again, I was really bad at school. I’m bad with structure. So I googled how to get rich online, and the first thing that came up was online marketing on the Warrior forums if anyone still remembers what those are. But it was online marketing, and that was the start of it.

For two years in my mom’s basement, learned how to make websites. I sold scams back in the day. I sold a free iPad if you enter your email, or free teeth whitening if they have this questionnaire. What they didn’t understand was that they get dumped into these marketing campaigns where they just keep getting spammed and they get rebuilt. So I did that for two years and failed. By the end of two years, my mom was like, I owe 30 grand on my credit card. My mom was just, I told you to get a job a while ago. Why didn’t you do it? And that was. It was a moment of reckoning, right? I think a lot of sort of agency owners, and entrepreneurs understand this point where you’re trying so hard, you’re telling everyone you’re going to make it, and then you have nothing to show for it except 30 grand on your credit card. So either way, though, I fought through it. I didn’t give up. I said, okay, it doesn’t matter. I got an entry-level marketing job at an agency based on all the experience I gained from doing my stuff. So it was beneficial.

I worked at an agency entry-level, got promoted every year, worked my way up, and built up some side clientele while at the agency. So after five years, I had a good, decent amount of side clientele while working at the agency. Then again, I always knew I still wanted to be an entrepreneur. I was making good money at this point, doing my two gigs, somewhere around 400 grand a year. I, then was comfortable. But then I’m like, all right, I want to quit my job and bring all of this and start my agency. And when I did that again, a lot of entrepreneurs would also understand this. Everyone around me said I was stupid, right? They were like, why? You’re doing fine now. Why would you just change everything? Because this isn’t really what I want to be. So then started the agency. I think within the first year, we already, have seven figures, but we’ve been growing since then.

Oh, yeah, for sure. And I think growing up, I think a lot of us don’t know what we want to do, but I think everything turns out the way it always does. I think everyone going through this entrepreneurial process or journey, or however you want to call it, they’re always afraid. They don’t know what’s going to happen. They don’t know what the outcome is. But from my experience, at least, everything always turns out the way it should be, as long as you just keep going and going, right?

Oh, yeah. The start is always the hardest, right? One is losing my paycheck and having to pay folks right in the beginning. So I don’t think I was paid for a good year. Going from 400 grand to nothing is pretty hard. We do have overhead, right? Because I got an office, we have furniture, we have people coming in, so we do have overhead. That was one of the challenges. The second one was how to solidify my sales process. Because when any sort of tactician who’s good at what they do. They want to start their own thing. The first source of business is always their referrals or people whom they’ve worked with already. But my goal was, after all of that, is exhausted, how do I continue to build the sales process for X agencies so that we can count on the growth? So that was the next, I guess those were the two biggest things on my mind, which is still the biggest thing on my mind now, which is sales and cash flow.

Yeah, and that’s a great question. And we’ve teamed this process up a bit. Right. And the way it works right now is a lot of agencies, charge for an audit, but that’s part of our sales process. So when we pitch a client, what we do is, hey, we say, hey, we’ll give you a free audit, but, and you don’t have to do anything with this audit. Okay, so we’ll do an audit, and then we give them this whole plan that we have, that we go through their accounts, we tell them what’s great, what’s not, and then we present them with the whole plan. And they can either, they can either use us or take the plan and do whatever they want with it. When we first started, I used to be the one who always presented this. Then it went to my chief operating officer, and we presented it. And then what ended up happening was the folks or the clients expected us to be on account. So we’ve changed that process a little bit. And as of now, a couple of things is this audit that we do for our potential clients, the client management team, actually does that audit so that the management, the team that would potentially manage that account does that audit.

So they have an understanding of the account before we even say yes or go into it. When they’re actually on the presentation, when we present it, the client managers on each section will go through their specific channel. So then now the potential sales, the potential client understands who their team is. So they see the full team, they understand the transition. During this audit, while we go through it, we always give them a score and we tell them exactly the percentage that we think based on our experience we can increase their revenue. So we’ll say, hey, based on our audit, we think we can increase your revenues by 50%, 100%, 150% without increases in your spending. So then we’ll take this plan. When they sign up, the account team will run it and we just run the plan that we pitched them.

Oh, yeah. So these are some of our first couple of brands, right? So let me explain. I’d say in my life personally I’m a natural contrarian. So I try to go against the grain, which is what we do at our company as well. So at X Agency, we prioritize knowledge. So every Friday we have a roundtable where we talk about the newest, latest, and greatest. However, where we understand what everyone is doing, but we do things differently. So we understand what everyone is doing but we’ll do things opposite of what everyone is doing because otherwise 1000, 10,000, 10,0000 digital marketing agencies, if everyone is doing what is on search engine land and search engine world, how do you expect us coming in as a new agency to do anything different? Right. Those numbers that we have here, as you can see, the first one, I can’t even see 2500. We brought them when they first started, their stock prices were 30-something cents. Right now they are publicly traded, they’re like $4 something. So they’ve grown tremendously. We took them all the way through from one store to 150 and global. They went from us to global, right?

Same consumer goods. I pitched an old client of mine, he was making 50 million a year. I came in and I said, hey, I can increase your revenue to 100 million by next year without jumping your spend. So what ended up happening was we jumped at 100 million. We had to increase spending by about 20%. But at the end of the day, that’s unheard of. Of normally, when you try to scale a company, the ROAS drops and plums dramatically. But we’re scaling, while we’re opening up, we’re keeping roads almost the same for these accounts over here, right? Same with the other, upscale brand furniture accounts. Same thing, same process, but we’ve grown them tremendously. Another quick story is my COO, Rachel Anderson, was a, she was the e-commerce director for one of our clients. And when I pitched them, I was like, hey, I can double your revenue in a month without touching your Spend. You just say you’re bullshitting, right? And I like, just let us try it. She goes, okay, sure. Literally, within one month, I think we quadrupled their revenue and spending that increase. And she was just so shocked that she was like, hey, can we jump on board and learn something, what you guys are doing?

Which is where we’re at now. She’s here working on the exit.

Thank you.

So one quick note for you is that 80% of our client, I think maybe more like 70% of our clients are e-commerce right now. So that’s easy for us. That is directly tied, I’d say our B2B segment is growing somewhere around 10 to 15%. And then we have nonprofits that are 10 to 15%. Okay. Now with that said, we try to get as close to the true number as possible. For our B2B clients, 80% of them are tracked through to the revenue. So whether it is connecting Salesforce to GA four or connecting HubSpot and figuring out and tying the exact revenue to the lead to the click from the channel, we try to get down there. We can’t do that for some clients because of their platform, but for the most part, we will always try to get down to the most finite revenue number. With that said though, I’d say the bigger issue is attribution and marketing channel attribution. Every person who manages their channel, the person who manages Google reports one number, and the person who manages Facebook reports another number. The clients will sit there and go, wow, I thought that we had three times the revenue, but that’s not what we have.

So for us, in terms of client reporting and business growth, we will always use GA4, which it knocks everything down to the last touch. But in terms of optimizing the accounts and managing it and understanding what works, where we have our managers use their channel numbers because at the end of the day, that drove that final metric.

Yeah, you know, Ranmay, how old are you? How long have you been doing this?

Yeah. Trying to say 2008. Okay, so maybe, yeah, you might have missed this period, but When I did, it started in 2008. Everything was manual bids, whether it is display, whether it is search. We didn’t even have shopping, so everything was done manually. And then when these automated tools started coming out, and then when Google started coming with automated bidding a couple of years back, everyone was already afraid. This was three or four or five years ago, everyone thought that Google’s kicking all agencies out, and they were going to take over. Our jobs are gone. But as an industry, tenfold, right? So one is our job here is here to stay, that’s for sure. Two is, at the end of the day, I would say we do not need to pivot industries because AI is, in almost every industry, just pivot the way you think. Okay. AI is now taking the role of manual labor. So you need to just change the way you think to not be a doer but to be more strategic in your thinking. So third point of this is a perfect example, which is, okay, automated bidding came out maybe two or three years ago.

Everyone was afraid because they didn’t know what to do. Then everyone started listening to Google, running the automated bidding campaigns, right? Because we’re listening and saying, hey, everything’s automatic, we don’t have to do anything, but we can hack the algorithm. Like the way we run Facebook, the way we run Google. As an example, on Facebook, Facebook tells you not to duplicate a campaign with the same target, and same audience. But if you were to just try this out, rame, if all you had was $100 in a day and one campaign, Facebook’s, Facebook is. The bids are converted and are controlled by budgets. Okay, so Facebook’s easy, right? If you want, if you increase your budget, Facebook will say you have more money to spend. So they would check on your CPCs, you’ll get a little bit more revenue, and your rose drops. Right. So the key point here is budget. So if all you had was $100 in a day, you split that into two campaigns at $50 a day. You have cut your CPC in half, targeting the same people with the same spend, but you, you’re spending the same, but you’re paying more.

And that’s what you call thinking or hacking the algorithm. So that’s what I’m trying to get at. Think, change the way you think into not being a doer, but being a thinker and how you can use AI to benefit them.

Yeah, so we have a staying internally, which is we’re racing to the bottom. Okay? Ranmay, for us, we do things opposite of what Google does. And so I’d say maybe a lot of other marketing folks might think when they’re doing it. Marketing folks look at marketing metrics, whether they’re impressions click share, or impression share. Same with Google. Hey, your impression sheet is dropping. This is whatever is dropping. But businesses don’t give a crap about any of that, right? Businesses only care about their bottom line, which is their revenue and their roads. How do we, so those are the two metrics we worry about, right? How do we increase revenue and increase ROAS or keep ROAS stable? That’s pretty simple. So for us, we try to rise to the bottom, and, let me try to explain one. Step one is bidding to the floor. Step two is trying to get into as many placements or surfaces as possible. So to use the same example, let’s just talk about one keyword, okay? If we’re talking about digital marketing, let’s just use digital marketing as that keyword. What ends up happening is when you put all of your bids into digital marketing, let’s just say all you had was $100 to spend in a day.

If your boss came and said, hey, we want to double our spending, what do you do? You just increase your budgets or you just jack up the bids for that one keyword, digital marketing, right? You don’t go anywhere, but in the picture, you had a hundred keywords and now you’re splitting that hundred dollars into these hundred 100 keywords at the lowest bids possible. You’re only going to show maybe one out of a hundred times compared to if you were to bid higher, but guess what, I have a hundred different places I can put it. So now I’m paying the bottom dollar CPCs do not matter what position I’m in, for the most part, right? As long as they click on it, then there’s a chance to buy. So for us, we’ll bid the lowest. So compared to other competitors in that same auction, we’re showing up less, we’re getting fewer clicks, but we are in a hundred times more auctions versus other folks. So we build every single thing out that you can make money on. Doesn’t matter. With automated bidding, you can make money everywhere. Now it doesn’t matter if it’s TikTok, YouTube, or Pinterest, those are primarily naturally displayed, they’re naturally meant for branding.

Both automated bidding. If you set the bid low enough to go high enough, you’ll max out your spending, but you can still make money from it. So we go from keyword to keyword, channel to channel placement to placement, and we try to get as low as possible and that’s how we optimize.

Great.

Yeah, I’d say don’t hire your friends. That’s one. This expires fast, three is you only have 24 hours in a day, so you need to all, that’s your biggest limiter or currency. That’s the thing that you should focus on, not really money. Right. So where, you know, where should you spend every single minute of your day? As an example, if you thought about it this way, for sales, what we did was when I first started, I only had so much time, so I reached out to referral partners who could continually bring me business. I just have to sell a partner who can always bring me business. And that’s efficient, right? Versus code, selling a new client every single time and wasting my time there. Because once that’s done, then it’s another sale, it’s another sale, it’s another sale. So if you just. I’d say that’s the biggest thing that I, as I got older, I wish I knew more of when I was younger.

No, thank you so much for putting me on the podcast, man. I have fun.

Thank you.