11/6/2020

Small Business Spotlight

Smarter Online Marketing for Evolving Times: WeAdvertiseYourBusiness.Com

Paul Kleen, CEO of WeAdvertiseYourBusiness.com, shares how he built his digital marketing agency to fit the needs of today's businesses, and why learning from failure was crucial to his success.

Katie Lee

Marketing Manager

Hatch:

Welcome to Hatch Small Business Spotlights, where small business owners share stories about getting started, lessons learned, and victories won along the way to building their businesses. I'm Hatch, and this time around, I spoke with Paul, founder of WeAdvertiseYourBusiness.com. Paul talked with me about the online advertising business, how it's changing on an almost daily basis and what failure has taught him about how to succeed.

Paul Kleen:

So, Paul Kleen, that's my name. I'm the CEO of WeAdvertiseYourBusiness.com and we're based in Austin, Texas. We run online advertising campaigns for other businesses. I think one of the biggest services that we provide that seems to be pretty rare right now in the marketplace and probably the most valuable thing now the coronavirus has hit is that a lot of companies and also other advertising agencies have significantly reduced marketing spend and staff. So a lot of times what's been happening is, agencies have subcontracted our agency to service their client accounts for a lower price than what employees were costing them before, because we don't charge them payroll taxes and benefits. We don't need a manager. We come with the team that we have, and in general, it's been a nice way fr them to downsize, but still have advertising and marketing knowledge that doesn't just evaporate as their marketing team goes from a head count of five to zero.

Paul:

So there's for sure big opportunities with other agencies to outsource their work to us. That's a sister brand. It's really just the DBA that we call We White Label PPC and then the other side of the business is like I mentioned before, WeAdvertiseYourBusiness.com, and that is our primary LLC's name. And that's where we work directly with businesses and brands. And they have a similar issue where they have had to lay off staff and they've had to cut budget. And because of those reasons, they've hired us for a very similar solution. And it feels like in general, that's where the advertising industry as a whole is going, it's moving toward things that don't take entire teams to get campaigns live and running and working and not having to hire full-time staff in-house, which is strange because there wasn't exodus from advertising agencies in the fifties and sixties, which sparked the Mad Men TV show on Netflix. And now people are starting to come back to them because they cost less than full-time employees do.

Hatch:

That's interesting. And yeah, I was planning on asking like, how has the pandemic effected your business? But it's interesting. It sounds like things are really changing.

Paul:

So March and April were pretty tough, I think for everybody. And that's because it wasn't actually something where they immediately found the solution to hire a team like ours. Most companies just immediately stopped all ads altogether.

Hatch:

Right.

Paul:

So there was really no outsourcing needed, but in May, once these teams had kind of downsized and figured out they're budgeted and how they're going to approach it, that's when we had our sales immediately bounce back June, July, August, September, and now October, we have just had record-breaking sales every single month, all throughout consistently. And I think it's because we are positioned in a way that makes a lot of sense. We do white label work, we're US-based, those things are pretty rare in the white label industry. I also think that a lot of agencies have gone out of business that had five to 10 clients, and we are over a hundred clients. So we were able to weather that March and April storm, where we lost 30%, 40% of our client base, but that's still 60, 70 clients and we had several agency partnerships that made it through.

So those things helped us get through because we were big enough. And I think on top of that, the fact that we can help brands, but also other agencies and we have different departments on our team that specialize in that, and the service does change based on if it's an agency we're working with, or if it's a business owner that we're working with. Those things have helped us not get so pigeonholed that the recession totally kills us. We kind of fell into it, white label work. And when the pandemic started happening, I realized that if we can just push that lever a little bit more, that to me was our best way to get out of the recession and avoid it without having bad sales for the rest of the year.

Hatch:

Can you talk to me about, even before you started this company, where were you when the idea kind of first occurred to you? What were your circumstances and then how did this idea germinate?

Paul:

Yeah. So that brings me to the person who introduced us for this interview in the first place. I was working for Thomson (Nguyen, Hatch CEO) and I was working at a company called Framed Data. That company was being acquired by Square Capital. And at the time all the marketing staff, which I was on the team of, had to figure out, "Are we going to go work at Square or are we going to go and do our own thing?" And I chose the latter, which is around the time when I started this company.

Hatch:

Now, I'm sure it was not an easy decision to start your own company, but I'm curious, was it an easy decision for you to say I'd rather go out on my own?

Paul:

No. Definitely not. I had to look at my checking account and make sure that we had time to pull this off and be able to break even. I think for me, the goal was take on any work that I could for any price, just to get to the point where I was able to cover my own rent and then work from home with no desk and no laptop that was super expensive and none of the extra fast Wi-Fi and things that we have now. So basically just getting an MVP product, minimum price we could charge, as many people as we could get in no matter who they were. We kind of just took a lot of work and lost a lot of work in that first year because we were pretty desperate.

So that's scary when you make that first jump. And it also meant that I had to turn down interviews and I had to cancel any other stuff that I was currently working on that would have pulled my distraction. And those things are terrifying, especially when you've had a business like I did that didn't make it. 10 years ago, I started a business and it failed. And that was on my mind the whole time when we started this business was how do I avoid it failing like it did last time?

Hatch:

Yeah, that's interesting. That's true of many entrepreneurs, I think, but it's not something that people love to talk about, I guess. Can you tell me a little bit about your first business and what you learned from that experience?

Paul:

Yeah. So I've always been in marketing and the first business that I started was a social media consulting firm. We didn't do advertising like we do now. And we were billing in a very different way than we do now as well. So we're in SAS and we have an application and there's a little bit of tech behind our business. We've also had a lot of things that I changed for this go around that really caused the failure in the first timeframe, which mostly comes down to the fact that we only billed when people called us so people weren't calling us because they knew it would cost them money. That's basically the main issue with lawyers is there's a lot of them, they all bill hourly and they can't get enough money to make ends meet every single month and know how much they're going to make next month, because it depends on a catch and release business model where you get a client, they make good billings in March, but they never call you going in April because they know if they do, you're going to send them a bill.

Hatch:

Right.

Paul:

And that is a business model that a lot of agencies are on right now, is it hourly billing. And each month they make different amounts from their clients, but every month they have the same cost to service those clients. And I just realized that really was why the first business I made failed. We were first off only doing social media, which is one 20th of the things that you can do for marketing consulting.

Hatch:

Yeah.

Paul:

We were billing on hourly instead of a flat monthly rate. And I think the other problem was that we only worked with other businesses and we kind of viewed other agencies as just straight up competitors, didn't want anything to do with them, instead of thinking, maybe we can help them too. And they might find that that could be a functioning social media department in their agency because maybe they can't afford to staff them, right? So at the time I didn't think that way and I think it hurt us. At a high level, those were things that ultimately will affect your business and the trajectory of that business's growth. And that to me is what I had to fix this time around.

Hatch:

For listeners who might not be as familiar. Can you describe to me what white label means in terms of your work and what that actually looks like? Like what work you're doing for agencies?

Paul:

Yeah. The definition is a little blurry, because white label for us means that we're going to handle everything that your client actually hired you to do, which is build campaigns, track their performance report on that performance. The part that we don't do though, is we don't meet with the clients and have a personal interaction with them because the concept is that they don't know you're hiring us, right? So they never speak with us directly. And that is the whole white label concept. It's providing a service that in reality is subcontracted, but the client who hired you isn't aware, or simply doesn't even need to know that that part of your business is being outsourced because a lot of the other services you provided them might be from in-house employees, which is extremely common in almost all contract labor environments, like home improvement, construction, et cetera-

Hatch:

Right.

Paul:

... as well as government work too.

Hatch:

Right. Sorry, we're kind of jumping around chronologically, but can you tell me about what it took to get this business off the ground? Were you confident the whole time? Did you know this was going to make it, or were there some kind of iffy moments?

Paul:

I was confident that I was able to pull it off because you really have to be, and you can't think about that every month or you're just going to give up because the first six months is extremely volatile and I think it was a year and a half before we actually felt like we were stable enough that I could hire more people, but I always represented myself as a team to client accounts. I always said we, instead of me or I. I always thought about these are the goals that I want in six months. And if I could just hit them, then I can stretch it out further. I didn't start this business thinking I need to make a million dollars. I pretty much just started at saying, "All I need really is $2,000 a month to cover my expenses."

Hatch:

Right.

Paul:

That's a much more realizable goal. And then, I think what we realized was that honestly, we were just too small to be able to afford net 30 invoicing. And we fixed that problem. So I just told every client, "Look, three months, we're going to do invoicing. At the end of that three months, we're moving everyone to Stripe. You're going to get billed at the beginning of the month. It's going to be a flat rate monthly fee. And if your bill doesn't go through, the services are down immediately. So make sure your credit card is up to date. If it's not, you've got a three-day grace period." And that helped us eliminate any delinquent payments. I think in our first year we had five or six clients go out because they just stopped paying their bill, because we were billing them at the end of the month and giving them 30 days.

And if campaigns didn't go well, they were thinking, "Why would I pay them?" It was actually a much bigger challenge than you would think. When you're building a business, you don't think, "Oh, I hope my clients pay." You think, "I need to get clients and make money." But the problem is you can get the clients and they just don't pay you.

Hatch:

Yeah.

Paul:

And that's a big problem.

Hatch:

Yeah. And I'm sure it's pretty tough as someone in that position. Like you say, you're representing yourself as a team, but as a single person or as a small team, it's tough to just say that to your clients. I would imagine.

Paul:

Yeah, for sure. But at the same time, I thought, "Who else does this?" A lot of people do. You can't go into the movie theater unless you pay up front, you can't get on an airplane unless you pay up front. You can't watch Netflix for a month unless you pay up front. And that is because they didn't want these issues, right?

Hatch:

All right. So you alluded to this, but yeah. Can you tell me a little bit more about how you found out about Hatch, which I think is atypical for Hatch customers and how you became a customer yourself?

Paul:

Yes. So we found out about Hatch because the founder of Hatch is a extremely gifted entrepreneur and some of his previous entrepreneurial businesses that he started, we were working for him directly. I was working for him directly, and my co-founder was not working directly with him, but did know him through the connection. So we both knew the founder of Framed and he sold it to Square. After a couple of years at Square, he left and started this business raising funding and needed marketing help. So he contacted us. He also had invested in our business because I reached out to him and asked if he'd be interested. So there were a lot of things that kept us in touch between when I worked for him and where we are today. And that's how I knew about Hatch. I pretty much knew about Hatch when it was just an idea that he had before he even built it.

It helped our company because we had personal credit cards. And at the time I hadn't created a business checking account or a business credit card because I didn't think we were big enough to really need that for accounting purposes, and to make sure that we reported our business properly. But eventually, we hired an accountant and started doing the formal tax planning process and realized that we really did need business credit cards. And at the time, we just didn't have a ton of people that we thought could get us a business checking account as quickly as Hatch or a credit card as quickly as Hatch, because our business probably didn't have a ton of credit history since it really didn't exist past a year or two prior to when we first got that credit card from them.

Hatch:

How do you see your business continuing to evolve? And do you think... Roughly speaking, like what do you want it to look like in a year? What do you want it to look like in five years?

Paul:

Yes. So, the advertising industry is changing a lot and Google and Facebook and Apple and all these channels that offer advertising are pretty much monopolies at this point, but the DOJ is trying to break them up. And there are other channels that are trying to compete as advertising solutions. And one of our... I think everyone's biggest fear is just automation and AI are going to make it totally unnecessary to hire anyone to run your ad campaigns. And a lot of these campaigns, some of them have become so easy that it's a couple of clicks and it's a pretty well-performing campaign. And sometimes it's not necessary to even look at it again. And that to me is probably the worst fear that we have.

So we've had to plan for it and understand some of these emerging networks that people are running ads on, and what I think is probably going to happen is these channels are going to get broken up. And after they figure out how to automate self-serve advertising platforms like you can do on Instagram and Facebook, at some point, people are going to stop using those channels and the ones that are emerging, like TikTok that don't have automated advertising because they're brand new, might start getting the attention of business owners because consumers use them more. So I think even if AI does automate advertising in a way where you don't need people anymore, it's probably going to evolve. And at some point you're going to need someone who knows where to spend your money online, to get leads again.

Hatch:

Right. Do you guys have a TikTok division set up yet?

Paul:

We were about to, but a lot of our clients got cold feet when they talked about taking it off the app store. So they pretty much canceled any plans of even considering that channel. And if your customers have to have money to afford your product, it's not good because a lot of the people using it are pretty young.

Hatch:

Right. Yeah. Best of luck. And yeah, the last question is there anything else you want to let our listeners know about your business, including maybe where they can go to learn more?

Paul:

Yeah. Yeah. The place to go is WeAdvertiseYourBusiness.com if you are a business owner looking for advertising solutions. But if you're an agency I'd highly suggest you go to our DBA site, which is wewhitelabelppc.com, because that one's going to make a lot more sense when you get to the homepage than our other site would, because they are extremely different in how we position ourselves and price ourselves out.

Hatch:

All right. Great. Well, Paul, thank you so much for joining me. It's been a pleasure speaking with you.

Paul:

Nice to meet you, man. Thanks for your time.

Hatch:

Thank you. Take care.

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