In this interview, Matt Paulson and a fellow agency owner discuss a growth strategy that focuses on scaling revenue by moving upmarket rather than increasing the number of clients. They explore the mechanics of a percentage‑of‑ad‑spend billing model, noting that to reach a $10 million revenue target an agency must manage roughly $100 million in ad spend. The conversation highlights the importance of mastering YouTube advertising for niche, high‑value businesses, developing profitable sales funnels that break even within 30‑60 days, and enabling clients to increase their spend. They also acknowledge the limits of scaling existing mid‑size clients, who often plateau around $500 k per month, and propose targeting a smaller set of clients that generate $1 million+ per month in revenue to achieve higher agency growth without expanding the client base.
So I've been giving it a lot of thought this year. I don't know if you ever see any of my posts, but I'm pretty much going all in on YouTube ads for very specific businesses. And I don't know, what do you think about this scaling approach? So we're thinking of instead of taking on a higher volume of clients, just going upmarket and retaining a certain amount of, a relatively small number of clients, but essentially just continually going upmarket.
Yeah, well, I mean typically if you have, paid advertising clients for Meta or Google, you're getting paid a percentage of spend, right? Mm-hmm. So if you're averaging 10% of spend or whatever that number is, so if you wanna be a $10 million business, you have to manage $100 million in spend. So that means you gotta get really good at what you do. And then if you can help your clients develop profitable funnels where they're breaking even in 30, 60 days, they'll be able to scale up their spend. And then ultimately you'll be able to scale up your revenue and feel like that's what you gotta do.
Yeah. What I've, what I've come across is, so we obviously scale people. I would say we do a good job 'cause we're always competing against other agencies and we've retained some of our clients for over 6 years. But at some point there's only so much we can do to continue scaling them. And as you know, a lot of businesses get stuck around the half a million a month range. So that my thinking was to, Start going for more clients that are doing million plus a month in revenue. And that's kind of the approach.
You know, usually bigger clients tend to have their stuff together more. They're a little bit less needy and like, this campaign absolutely has to work today, or like, I'm screwed. So like, that's better, but you do have to kind of earn the right to work with bigger clients by showing that you can do that. And usually the needs of like working with like a smaller guy that's got like an info course, like, you know, it tends to be that person and then a couple other helpers. When you work with a big company, you might be working with a marketing team and that's just a very different dynamic.
