Directive Launches First Comprehensive Database for Search Marketing
AUSTIN, TEXAS (November 18, 2019) – Directive, a leading enterprise search marketing agency, launched the first database for search marketing,...
As a search marketing agency, one of the first things most clients ask us about our services is, “What is the right PPC agency pricing?”
It’s a fair question, but one that can be hard to answer right away. Numerous factors go into PPC agency pricing, and quite frankly, there is no perfect PPC pricing model.
Almost every agency handles pricing differently, but sometimes these discrepancies can cause distrust between potential clients and the agencies they’re looking to hire.
When it comes down to it, the “best” payment plans for managing PPC campaigns differ based on the exact needs of the client.
In this post, I’m going to dive into the different, most popular PPC agency pricing plans available. Hopefully, this gives you insight on which option works best for your company.
For paid campaigns, there are various pricing models you can choose from. However, the most common ones include:
Let’s dive into the different pricing models now, and break down the benefits and pitfalls of each one.
This payment method is straightforward but ensures you fully comprehend the different nuances in creating and managing a Google Ads campaign. You’ll want to keep an eye on your invoices!
Exceptional Google Ads campaigns take time to set up and manage. So, depending on the complexity of your setup, this option may not make the most sense for you.
It’s Simple
It Requires Attention and is Easy to Track
It Helps Prevent the Scope Increasing Without Your Knowledge
Large Up-front Fee
More Hours Doesn’t Mean Better Work/Results
Discourages Speed and Growing of Skills
When charging hourly, it may sound appealing and easy to manage. It’s easy for agencies to sell this.
If you only need short-term projects or just consulting, the hourly model might work for you. However, the cons outweigh the pros here. It discourages growth and efficiency, which is something you should be searching for when it comes to PPC management, whether through an agency or in-house.
There are two ways the “charging based on performance” model can be utilized, either through monthly performance (i.e., leads generated) or through milestone performance (once we hit X amount of leads or revenue from PPC).
It’s Rewarding
You Get Your Job Done
It Makes Sense to You
Can Prioritize The Wrong Metrics
PPC Success Isn’t Always Black and White
Seasonal Trends and Data Accuracy
While paying based on performance seems like the best option from the surface level, keep in mind, other factors go into PPC campaign performance.
When your campaigns are working, paying by performance is a great option. However, if issues creep in, it’s easy to play the blame game between the PPC agency and the client, and can turn the relationship ugly.
From our experience, we tend to stay away from performance-based payment options.
With the flat rate payment option, your PPC agency receives an understanding of your current account setup and estimates the time it will take to manage and optimize your campaign moving forward.
Caution: be wary of project or onboarding fees in this setup. Many agencies charge an initial onboarding/research fee that is much higher than the ongoing monthly management fee.
It’s Simple
Prioritizes Efficiency and Creativity
Potential Addition to Scope
May Be Difficult to Start Small
A flat rate agreement makes the most sense for established brands and companies who don’t have an internal person with weekly time to manage PPC campaigns. If you’re a company who has never run PPC campaigns, it may be hard to “test the waters” with an agency that charges a flat fee.
With the percentage of spend model, as the amount of Google Ads spend goes up, so does the fee. If your agency is clear about their pricing models, you get a good idea of how prices will change, depending on the total spend. However, you could get stuck paying more than you realized.
It’s Scalable – No Scope Creep
It’s Good for Test Campaigns
It De-values Efficiency
Possible Client Issues
Small Account Struggles
While the percentage of spend can be appealing for smaller companies, it can quickly get out of hand when looking to grow by leaps in bounds. In some cases, a cap should be implemented. Fifteen percent of ad spend may make sense when you’re spending $50,000, but starts to lose its appeal when spending creeps up to $250,000 and up.
There are many different optimizations an agency can implement when running PPC campaigns. Your goals may impact the type of payment structure that can increase ROI and bring in the right traffic to your site.
If you’re in a competitive market where the average cost per clicks are $50, a percentage of spend model may not make the most sense
The obvious choice for defining value may seem like the results your campaign sees. However, if you’re entirely new to running PPC campaigns, you may think a 5% conversion rate is incredible, when really, with a little more time or expertise, that conversion rate could soar to 15%.
Laying out the most necessary qualities that define value is the best place to start when determining your pricing model. In my opinion, value is a combination of expertise, time, and results.
Remember, each pricing model has pros and cons, but depending on your definition of value, the advantages of some pricing models greatly outweigh the contrary.
At Directive, we primarily use the flat retainer model. To us, this makes the most sense, especially in the B2B and enterprise space.
Percentage of spend and hourly rates can easily lead to conflict of interests. We want to ensure our clients’ performance is our number one priority, and we give them the quality services they deserve. This also allows our team to take learning and research time seriously.
Also, a flat fee allows our teams to spark creativity in how they approach search engine advertising. If a Google Ads campaign is struggling, we can position our clients on third-party directories like Capterra or Software Advice. It’s important to not settle with what’s not working and discover new ways that can move the needle for clients.
Additionally, it allows our PPC specialists to regularly collaborate with our CRO designers, without jacking up hourly prices, and ensure that design elements are of the highest quality.
In the end, assess your current needs and goals to figure out which pricing model makes the most sense for your business.
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