What Does PPC Management Cost?

How Much Does PPC Management Cost

There are generally two different pricing models:

  1. Fixed Fee
  2. Percentage of ad spend

Percentage Of Ad Spend

How this works is that when you get to the end of the month and your total ad spend for the month is known, you’ll be invoiced a percentage of that figure as your management fee.  It’s usually around 10%, but of course this will vary from agency to agency.

So, if you were spending £10,000 per month on ads, your management fee would be £1,000.

Most agencies who use this pricing model will have a minimum fee so that if your ad spend drops below a certain threshold they’ll still be guaranteed a set fee.  For example, if your spend were to drop to £2,000, instead of paying £200 in fees you might pay £500 as a minimum.  This way when your ad spend goes about £5000 per month you’ll be paying the percentage rate.

Fixed Fee

As the name suggests this is very straightforward.  You’ll be given a proposal outlining what the monthly fee will be.  It’s common to be given the condition that if your monthly spend in the future goes above a certain level the management fee can be revised.  The reason for this is that as an account becomes larger there’s a lot more work that needs doing to maintain it, so the agency will expect to be paid accordingly.  If you expect to grow considerably in the future then expect to have this conversation with the agency at some point.

Pros & Cons

Fixed Fee

>> Easy to budget and manage your cashflow as you know exactly what your costs will be

>> No reason not to try and reduce costs for the client, especially if this can be done while maintaining the same returns

>> If there are big variations in spend month to month your fee isn’t adjusted accordingly, which can result in a disproportionately high management fee compared to spend

Percentage of Ad Spend

>> Can make it difficult to manage cashflow, especially if you have a very seasonal account where ad spend varies considerably month to month

>> No incentive for the agency to try and reduce costs for the advertiser, as if they do their fees will go down

>> For large accounts with big variations month by month fees will fall as ad spend falls so you’re not overpaying for fees

 

How Much Will the Fee Be?

This is a very difficult question to answer as this will vary from client to client, and is dependent on lost of factors, including (but not limited to):

  • Size of the ad budget
  • The types of campaign being managed (Search, Shopping, Display, Video…?)
  • The complexity of the campaigns
  • Additional services like landing page creation and testing, image ad creation
  • For Google Shopping whether you need feed management as well as campaign management

Therefore, it’s impossible to give a ‘one size fits all’ answer to this question, but in my experience I’ve seen fixed fees ranging from a few hundred pounds per month up to many thousands!

The only way to find out would be to talk to your prospective agency and find out what they would charge.  And remember, there’s no harm in shopping around the finding out what all your options are as even fixed fees can vary a great deal between agencies.