President of Booyah Online Advertising, Troy Lerner sits down with me to discuss the one-man band, direct response, and his advice for the challenges he faces as a leader.

When Troy was first introduced to Booyah, his initial goal was to poach their talent, but he soon found himself being poached and joining Booyah. Initially Booyah was a software company. Troy grew Booyah out of software development and into a leading online advertising company. After giving us a tour around their spacious office in Westminster, Colorado, we sat down to talk about what brought Booyah and Troy to where they are today.

You can find more information about Troy Lerner and Booyah by visiting their blog and following them on Facebook and Twitter.

Video Transcript

Brent: I’m Brent Weaver and you’re watching “uGurus.” The must-watch Web series to become a more profitable and in-demand Web professional. Today, I’m at Booyah Advertising and I’m talking with their president, Troy Lerner. Welcome to the program.

Troy: Thanks a lot. Nice to be here.

Brent: So, Troy, tell me about Booyah.

Troy: So, Booyah is a digital ad agency. And we deal almost exclusively with direct response. Meaning we touch just about anything that we thing will affect a sale or a conversion online. So, it means lots of search, lots of banner ads, video ads, sponsored e-mail. Anything to sell a product or a service.

Brent: So, who’s a typical client for Booyah?

Troy: The clients that we brag about, right? The big names. It’s the Gap brands, so Gap and Banana Republic. Teleflora, Fiji Water, DISH Network. Guys that are selling a product or a service online. Mostly
consumers.

Brent: So, when you say the sale happens online, the actual conversion, the financial exchange happens over the Internet? Or is there any bricks and mortar behind that?

Troy: For a lot of people, the actual conversion happens over the Internet. But many of them are trying to push something to happen offline, right? So, one of our big customers is Western Union. And they want people to go in to one of their 70,000 retail locations and wire money out of the country.

So, that all happens offline, but what they want is something very measurable to happen online. Like in their case, use a coupon code, open an account. The guys like Banana Republic? They want to sell you a sweater online. Period. End of story. That’s it.

Brent: Now, Booyah, what size are you guys at today?

Troy: We’re about 50 people.

Brent: 50 people. And where did you start?

Troy: Just me. One-man-band. The company Booyah existed before I got here. Booyah had a piece of software that they sold to other ad agencies. And I worked for a big ad agency and we were trying to steal that software.

I actually met Booyah trying to poach one of their engineers out. So, a big agency could replicate the software and quit paying for it. And they talked to me “We do all this software and this is great, but we kind of want to had an ad agency, too.” And sell ad services to them.

So, they did a little jiu-jitsu and I went to work for them as a one-man band doing the ad agency services in the corner. The software is gone now, it’s obsolete, it no longer exists. But the agency built up and now, we’re 50 people or so. And those old software guys have gone on to a new software project.

Brent: So, you came in to poach their talent and they ended up poaching you?

Troy: Literally. So, at the big agency I was at, they had in the kitchen, on the bulletin board “$1,000 bonus for anybody that can find us an engineer that does ‘XYZ.'” And I found these ten guys called Booyah in Boulder, Colorado and I thought “This will be easy pickings.”

I worked at Razorfish at the time, which was real hot back in 2004.

And I thought it was going to be easy. But they talked me out of it. And a couple of things at the same time at Razorfish and it made me feel like this is too big of an agency to ever make a difference.

And I thought “Small agency is what I do.” And so, it worked.

Brent: You started as the single operator and you grew that to 50 people. So, what, kind of, has changed in the Web market for you guys over that period of time?

Troy: Over time, we’ve added a lot more services. I guess just advertising on the Web has added a lot more services and mature channels.

When we started, all I did was paid search. I would just run your Google paid search account. And then your Yahoo! account. And then your ask.com account back when that mattered.

And it wasn’t for years that we got into banner ads and e-mail and video and everything else. It just grew, basically, from client requests.

They just couldn’t spend any more money efficiently. And they’d say “What else can you do”? And like any small business, we’d say “We can do anything.” And we’d figure it out.

Brent: So, tell me about a typical project. You mentioned managing some ad campaigns. Are you guys also building websites and microsites or actually designing out the campaigns? What’s the makeup of a typical Booyah campaign?

Troy: Usually, a client says something to us, like, let’s make up a project. They’ll say “We want to sell bouquets of roses for $25 a piece.”

Meaning their cost to sell them, maybe they sell them for $60, but they say “Spend and advertising $25 a pop.”

And then they look to us to figure out what kind of keywords should we buy and how many of them should we buy? Banner ads, video, all the rest.

And then, we don’t build websites. But we build the ad and the landing page and the funnel that they go through.

So, Booyah wouldn’t build your shopping cart. But Booyah would build your landing page and your “More information” page and your forum experience. We do that conversion funnel piece.

So, we have developers and designers on staff. But they work for our media people. We are media buyers and optimizers first. And part of that is getting the banner ad and the landing page, so we do that here on site.

Brent: In terms of business model, I know from traditional ad agencies, there’s kind of an agency fee that you get from media buys. 10 or 15 percent or whatever it is on top of media buys and that’s how most agencies, that’s what pays their bills. Is that similar to what your business model is?

Troy: You know, it really is. Maybe for simply the reason that that’s people are used to. So, normally, we go to people and we say “We are a percentage of the media that you spend.” What, I think, is maybe a little bit different in how we do it is the level of transparency.

So, a lot of agencies, one, they mark up media that you buy from them. So, they make a spread on the media, plus a fee for managing that media. Plus a fee for the tracking and management tools that they use in the project.

We only make money as a percentage of media. So, we pass through our tools at cost. We pass through the media at cost. We only make that percentage fee. That said, a lot of clients, after we’ve worked with them for a while, say something to us like “Do you want to put some skin in the game”?

Or we’ll say to them, I’m making up a number here. “Hey, you’re spending $50,000 and we think you should be spending $100,000.” And they show some heartburn “I can’t spend $100,000.” And a half a dozen times, we’ve gone and said “We’ll spend the $100,000. Cut us in on the upside.”

And so, we have a number of relationships where we’re writing the checks for the media and participating in the performance.

Brent: So, you’re almost getting more paid in an affiliate type of relation?

Troy: It’s like being a master affiliate, exactly. We never start there. But when you have a client for a number of years and you feel like you really know it, I love those projects. I love them.

Brent: A lot of Web professionals have a hard time selling Internet marketing services. Selling search engine optimization, selling manged pay-per-click. That’s all you guys do. So, I’d love some insights on how you build that value prop.

Troy: What’s funny to me is when I think about selling the other things, like development and design, I have no idea to do it. In my world, selling direct response or things that drive traffic. It’s almost not a sale. It’s a spreadsheet of hopefully black numbers. Sometimes, red numbers.

If the number is red, it’s not sold. There’s nothing subjective about what we do. We’re not saying “Hey, I’m going to design a site that you think is beautiful and represents your brand well and sparks something emotional.” I’m going to sell a bouquet of flowers for $25 or less and it’s a yes or no proposition.

So, our sale is a little bit more about, I think, demystifying for people. SEO, especially, people feel like “This is really black magic stuff.” And we tell them it’s not. AdWords aren’t hard, it’s easy. And if it seems hard, we’re month to month. It’s “Give me a chance to sell the roses. If I can’t, you get rid of me. If I can, keep me again.”

It’s that fast. There’s not a big setup. There’s not a huge investment up front.

Brent: Do you guys find you run some, initial tasks to kind of prove that it works for the customers? Or do you guys just kind of have your methodology and go all in on some of these projects?

Troy: Like you, we want to go all in whenever we can, right? We try to sell the all-in. We, about a year ago, decided it’s really hard to find somebody spending a ton of money already, that wants to just slide it from Agency “A” to us.

And so, we had to build kind of a team within our team to handle smaller projects in the effort to grow them to be large. Our own farm system, if you will. So, we have a group of people that work on a little bit different scope and work on a different pricing structure. And their goal is to introduce people to digital marketing and grow them.

We don’t take projects that we think will remain small forever. This is us figuring out a way to prove it to somebody before we go big. And it works.

Brent: In terms of “big,” what do you guys look for in terms of ideal customer? What’s an average spend with you guys over a 12-month period for a great customer? You can brag a little bit.

Troy: Yeah, right. So, the biggest customer spends between $4 million and $6 million a month. And that’s beautiful, right? If we take that guy out of the equation, the average of the rest of the customers is somewhere around $75,000 a month. That said, we have a lot of customers that spend $5,000 a month. And they want spend $5,000 to see if it’s possible to spend $10,000. And if they can spend $10,000, they want to spend $20,000.

They really view the work that we do more like a sales commission, than an investment or a capital expense. They think of it as “I want to sell some roses. I’ll pay that guy $25, a bouquet to do it.”

Brent: In terms of how you guys have grown the business, you go in and do these direct response campaigns for customers all the time. Is that the same methodology you’ve used to grow Booyah in terms of one employee to 50 employees? How do you guys get your customers?

Troy: This was a nice story. So, I came on in 2005, a one-man band.

And we got our first customers just from people that Booyah was already working with. And then, people had heard I left a big agency and followed me over. Thinking “This has got to be cheaper.” And they were right.

And for a long time, our pitch was “Hey, we’re the guys from a big agency with a low overhead in Boulder. Not a bunch of red type and so we’re a third of the cost. We do the same work and use the same guys, just cheaper.”

So, for the first seven years, we never even had business development. I didn’t have anybody making phone calls on our behalf, reaching out. We didn’t run our own ads, we didn’t do our own optimization for ourselves. It was just word of mouth.

Our contact at one company would leave and go to another company and they’d hire us at the new place. It wasn’t until the beginning of this year that I hired some biz dev people and gave that a try. The reason we couldn’t do it for so long, I think, and where it’s still difficult is, there’s this feeling I think about Internet marketing that something is shady.

Something is shady. There’s bots clicking our traffic and there’s dudes in their underwear in their basement doing strange things to cheat Google.

Brent: Do you guys have a backroom here with just dudes in underwear?

Troy: We just have a giant basement with dudes in their underwear. It just feels shady. It’s hard to apply salespeople to something that already feels shady. And so, we found a lot more success just asking our clients for other introductions and just offering.

I would never turn down a conversation to sit with somebody and just give them some advice. We’ve got our largest client, the guy spending $6 million a month. Me, just as a friendly, connected by Mike Gelman from Spire.

Brent: Who’s on the program.

Troy: I saw that, right. Everybody knows Mike Gelman. He was just like “Hey, one of my clients is having trouble. I think you know about it, could you have lunch with the guy”? And I’m just helping him read his bill and understand it. And thought “There’s no way I’d get hired.”

And a month later, got a phone call. “Hey, we have a little project, can you help us out”? Not “little project.” It turned into a company-making project, frankly.

Brent: So, with 50 folks on your team, you obviously know how to find talent. Do you find people that are doing great things? Or do you find people and teach them how to do great things?

Troy: We struggle with that question a lot. In the early days, our mantra was “We’ll never hire junior people. We’re big-agency guys that have chosen to be in a boutique, but we’re just going to hire big-agency people and that’s how it will be.”

We did that because we were tired of being the junior guys at a big agency. That’s what we used to be. Now that we left, we’d thought we’d be hotshots.

And then, we had more work than we could do. So, we hired a class of college graduates five at a time. And tried to train them up as a group.

And that worked. I think where we’ve kind of settled out right now is Colorado is our biggest recruiting tool.

So, our industry has no shortage of good talent. But it does have a shortage of the talent in Colorado. They’re all in Los Angeles or New York.

But they all have this dream and this fantasy about Colorado and we use that. If we can get somebody to come out to Colorado, then they’re thrilled to find out that there’s actually an ad agency here moving the big dollars that they’re used to.

And they’re like “Wow, I didn’t know this was out here. I thought you had to be on Madison Avenue or in L.A. to do this.” And if we can get them out here and get them to buy a house, then they don’t get poached from us.

That’s the problem with other agencies and we use this to sell to our clients. If you’re working with a giant ad agency on the coast, you’re used to a revolving door of people on your account. It’s one 24-year-old after another. And we can tell them with a straight face “People stay at Booyah.”

They don’t leave and it’s not our intention to move them off the account unless you ask us to move them. Or things happen; people get married, people move.

But, generally, they’ll stay. And so, we really use Colorado as our recruiting tool. And make sure they have their weekends free to hit the mountains and do that stuff.

Brent: What’s your relationship with Web professionals in terms of Web designers, Web developers, small, medium and large agencies?

Troy: They are our number-one source of prospects and new business.

Until we had our own resources, we worked off of word of mouth. And such a big chunk of that word of mouth was Web developers.

So, Web developers and designers; for a lot of smaller businesses or emerging businesses, they own the relationship between that client and the Internet, almost, right? They are there to answer all questions Internet.

And so, they will always get asked “Can you help me with SEO”? “Can you run my AdWords”? “Can you make more sales happen”?And we’ll get phone calls that way.

Some of these come from real big agencies. We had a guy say it to us perfectly. He was like “We have no problem selling our client the first million-dollar website. But when we go back to selling a million-dollar website, I need numbers.” And he was like “That’s what you guys do. I’ll sell them a million-dollar website, you make it work and make him enough money to buy another million-dollar website from me.”

And that’s how that relationship works for years with that kind of a guy. So, I think we’re the guys that make the sales happen from a new design or development. So, we’re a good friend to the Web developers. We make more Web development happen.

Brent: Do you find that that’s like a white-label relationship that you guys try to manage with their business? Or is it a straight-referral relationship? I know for us, when we have press, we would ask you guys to come in. It was just like “We want to just refer Booyah.” Versus saying trying to package as something that we’re doing.

Troy: We’ve done it all manner of ways and we still do. It’s hard to do it as a white label. We’re always scared we’re going to pick up the phone and say the wrong thing or send an e-mail from the wrong account.

It’s really hard to do our work completely behind the scenes.

So, we do have some white label relationships. And we just make sure we get paid for all the hassle of building this Chinese wall of deceit in front of it. I just really prefer “Hey, this is Booyah. They know what they’re doing. We’ve worked with them before.” Make an introduction, we make that worth everybody’s while and do it that way. It’s much cleaner, I think.

Brent: That’s great. So, we talked about Booyah for a bit. In terms of you, personally, as a leader, what practices have you done that have gotten you where you’re at today?

Troy: You know, I’m a reluctant leader. Frankly, I have a big confidence problem with my ability to lead. So, it’s been quite a journey going from 1 to 50. Standing in front of a room of 50 people and thinking “I’m paying your mortgages. Your family is counting on your job here.”

It’s really stressful. I think the things I’ve picked up that have worked really well for me are to have the hard conversations faster. Like you never can deliver difficult feedback soon enough. And as a reluctant leader, that’s my Achilles heel. Is not giving somebody difficult-to-give feedback soon enough.

That’s been kind of the silver bullet, I guess, for me. Has been trying to spit things out faster to people.

Brent: In terms of your position at Booyah, what are you best at?

Troy: Biz dev. Biz dev. When I can get in front of a prospect and tell them the power of digital marketing, how trackable it is. How fast we’re going to know if we have a hit or failure on our hands. I can get them to buy it. I can get them to buy it.

In a service business, that’s where all of our money comes from, is new business development. That’s why they keep me around, I think.

Brent: Whose decision is it to keep you around?

Troy: Everybody’s got a boss. Everybody’s got a boss somewhere. So, I think that’s what keeps the board happy. The guys that really know how to do digital marketing now, the last time I ran an AdWords campaign was five years ago. You don’t want me touching your keyboards anymore.

But the guys that know what they’re doing trust me to bring them good projects. So, they want to stay and they want to do those good projects. I think they feel good about that. That’s worked for me.

Brent: Over the last decade, what have you learned that you think other Web professionals should know?

Troy: Good question. We’ve had a lot of success and a lot of traction with really focusing on the basics, the fundamentals. Getting the core right. Whether it’s paid search or organic search. There’s a lot of levers and buttons and shiny things that you can do.

But at the end, there’s good communication to human beings, right?

Where we’re working in this world where we want our website to look a certain way to the Google computers and we want it to do certain things technically. But we’re selling to human beings. And I think there’s this just core, fundamental best practices to that. To communicate clearly, to communicate honestly, to communicate quickly.

That can get lost in all of these bells and whistles. And so, I think we like to consider ourselves cutting edge and aware of the newest thing that you can do with marketing and advertising. But I’ll tell you that ends up being 90 percent of our conversations and 10 percent of the budgets.

The budgets come from old-school stuff. Just paid search. People buy paid search and SEO and they want to talk a lot about social media. And they want to talk about Instagram activations. And we can talk about it.

But no many ever really flows over there.

And so, we just try to do a really good job at the core. And then, clients stay a long time.

Brent: During Booyah’s history and this is something I wanted to bring up a little earlier. But you guys had a software platform, a product that was created. You mentioned one previously, but you had a different one.

You had the service business and then this products business. And whenever I talk to Web pros, you’re in the service camp or you’re trying to develop product or apps. How have you guys traversed that path?

Troy: We made a really conscious decision; the first decision was “Let’s choose one path.” I have been in companies that had a strong service side and a strong software/tech side. And they compete with each other internally for resources.

And there’s always a favorite child, it seems like, in those worlds.

And so, we really wanted to be on one side of the track or the other. We chose service. Maybe a mistake. The margins in service suck, it sucks.

It’s hard to scale, I really wish I had a great piece of technology, I really do. But I don’t think you can do both. I think you have to stick on one side or the other.

So much so that when we had another good idea for a piece of technology, we incubated it inside of the service team. But eventually, when it was ready, we cut it out into a totally separate tax entity. Funded it separately, put resources on it separately, treated it like a separate business.

And I think you have to. I think a service business and a tech business are just fundamentally different. And they have different margin expectations and just different scale expectations. It’s really hard to do both at the same time.

Brent: I think it’s an incredibly insightful plan. If you do have that product that gets created, to maybe think about what that product life cycle is and what’s going to be best for the product, not necessarily the company. And so, definitely props to you guys on that.

What trends are you and Booyah following right now? You mentioned some of the new social media trinkets and toys. So, Instagram and Facebook ads and Twitter ads. For you, where is the cheese moving to?

Troy: The days of media agencies, they’re numbered, in a sense. I don’t know. Perhaps it’s like the stock market was for our parents. You couldn’t do your own trading and buying $100 worth of stock without writing a letter to some company.

And now, you can do that. The Internet activates that. And now, the Internet has activated that for media as well. Anybody can open a Google AdWords account and spend $50 on keywords. Anybody can access this stuff.

You couldn’t really do that on the its scale and the television and print world.

And so, for us, I think it’s not about doing something dramatically different from every other media agency. I think it’s about doing really expert work that’s trusted, right? So, it’s like back to that core.

We’re not trying to do something out on the fringes. We’re trying to do what we know works; affordably, quickly, reliably just bulletproof, rock-solid process. And I think that’s what allows us to survive and grow, right? And then being ready to put some skin in the game with clients.

“Hey, we’ll play on performance with you once we know.” I think that works. So, it’s a flattening of the world. All these tools, they’re available to everybody. As a service provider, you’re only as good as your expertise. And so, that’s what we try to work on, is just expertise.

Brent: So, you guys have grown to 50 people. What’s next for Booyah? Are you trying to grow the entity to 100 people? Is it about expanding around the globe? Where are you guys trying to build?

Troy: I probably have such a disappointing answer for this. I just want to have a job for a really long time in Colorado. I know that maybe sounds crazy, but I love Colorado. I grew up in Colorado.

Part of the reason I jumped from big agency to Colorado was I had this manager there that loved calling Colorado a “cow town” with no real businesses in it. And I thought “No way. This place deserves a good agency.

And I think we’ve built that. I like having a really good reputation. I like having people that like to work here. I want the agency to be as big as it can be inside of Colorado.

We service people all over the country. We have clients with businesses all over the world. And that’s easy to do online. You don’t need people spread out internationally, I don’t think.

So, can we go from 50 people to 100? Probably. Can we go from 100 to 1,000? I hope not. We’ll have to find somebody else to run that. But I want stability. We’re not trying to build it to sell it. We’re just trying to build it to do good work that we’re proud of for a long time.

Brent: I think that’s definitely very insightful. We appreciate your time today, Troy. I wish you the best of luck with Booyah and all the projects you guys are working on. And we’ll link out to your blog, your website and any other information you want to share with us.

Troy: Fantastic. Thanks a lot. I appreciate it.

Brent: All right. Stay tuned for more great content from uGurus.com.