What should a PPC agency charge? A look into the market rates for PPC management
"In order to make money, you have to spend money."
You must have heard this at some time in your life, right?
It just so happens that the pay-per-click industry lives by this kind of mantra. There's a pretty strong chance that you can expect to make money if you're spending PPC money.
According to a Google report in 2018, every dollar that businesses spent on Google ads yielded them an average of $2 in revenue.
Still, a 2-to-1 return is nothing to write home about, especially when you take the costs of product or delivery into consideration.
You can attract a powerful ROI from your PPC spending as long as you hire the right people for your ad management, and you're clear on what you're paying them to accomplish for you.
We reach out to our friends at the New Orleans' Search Influence to shed some light on the subject at hand.
Since 2006, Search Influence has assisted businesses in the success of their online operations and activities.
Here is a summary of the three leading models in PPC pricing:
Percentage of ad spend pricing For this model, agencies charge clients a negotiated percentage of their PPC spend to manage their ads. Good for: Companies that intend to spend more on ads, in proportion with their total budget increase. Not good for: Smaller size companies that don't spend much on their ads.
Management fee + percentage of ad spend pricing Most experienced marketing agencies require a fee to manage the overhead costs that come from managing their clients' PPC campaigns. Good for: Customers who favor clarity and understanding in all operations and intend to maintain ownership over their ad accounts. Not good for: Accounts that function at a low-cost level.
Flat fee pricing Many agencies prefer to negotiate a flat fee after determining the static management costs of handing the client's PPC campaigns. Good for: Clients who prefer static campaigns with fixed monthly spending budgets. Not good for: Campaigns that are dynamic and more spontaneous in their operations.
Analyzing current industry PPC rates
Utilizing the makeup of the pricing models described above, let's analyze the costs that are related to each one. The following rates are based on moderate pricing in the PPC field.
Ad spend percentage: 15-30%
Though it's not normal for an agency rate to be as low as 15 percent of total ad send, large media conglomerates can offer features like kickbacks and performance incentives to prospective accounts. Agencies typically charge more than 20 percent for managing PPC campaigns.
Regarding a proposal based on this pricing model, the key questions to ask include: how often will the agency be expect to update the ad copy, create landing pages, and set up effective ad rotation?
Sometimes agencies will package this PPC service offer into a buffet style, while others will prefer a pay-as-you-go approach, where each task is itemized individually on a monthly invoice.
This PPC pricing model will most likely ask for a setup fee. Agencies rely on this charge to handle essential tasks like landing page implementation and lead tracking by using forms.
Ad spend percentage + management fees: 15-30%, $500-$5,000 per month
Monthly management fees are fixed and flat in this model and maybe regarded in relation to activities like updating ad copy, rotating ads, creating landing pages, running reports and doing A/B testing. Depending on the workload involved with managing a specific company's PPC campaigns, a management fee can cover a pretty wide span: Normally not under $500 a month, and could go up to $5,000 a month or more.
How much can you expect to pay a PPC agency?
To answer that question, we first must ask this one: how closely do you want to be involved with managing your PPC activities?
According to Search Influence, the person making decisions for a small-to-mid-sized business mainly wants to observe an increase of inbound leads from practices like PPC
If this happens, a pricing model based off of the ad spend would likely be the best way to go. But if you want to be keep your hands in the PPC pot from time to time, then you'll have to seek out an agency that itemize their services so you can manage your budget in the most detailed ways possible.
Most importantly, as a marketing services buyer, either paid or organic, it's imperative that you and your agency plan out and settle on your team goals before you start.
It's essential for you as a marketing services buyer and your agency to openly communicate and decide what goals and directives you agree to pursue before you begin.
A quote from Alice and the Cheshire Cat:
"Would you tell me, please, which way I ought to go from here?" Alice asked.
"That depends a good deal on where you want to get to," said the Cat.
The first step to success in anything is becoming clear about what everyone involved wants to accomplish and where they want to go.