After a three-month break, we’re back!
There were a lot of really good questions, but this one from Phil from Trumbull stood out:
“What is the average amount companies spend running a PPC campaign?”
Account maintenance fees vary widely; It is understandable that you would want a basis for how much to pay for PPC agencies/consultants.
However, there are a number of different factors that affect the cost:
- How high is the experience of the provider?
- How much do you charge the vendor for creative/technical tasks?
- Is that one channel or several?
- Do you pay to work as a strategist/part of your team?
All of this affects a partner’s cost, and there is no right or wrong answer to how “expensive” or “cheap” you should choose.
It is crucial that you have reasonable expectations of your vendor and the campaigns they create/manage for you.
How do PPC providers typically calculate their prices?
Hiring a PPC provider (be it for Google, Microsoft, LinkedIn, Facebook, TikTok or other channels) means you don’t have the time to do the technical work or assign strategic planning to those channels.
When weighing a vendor’s costs, it’s important to consider how much it would cost you to do the same job (i.e. how many hours would those tasks take x your hourly wage).
It is often much cheaper to hire an agency or a provider – but not always.
Flat rate + percentage of expenses
The most common management fees are a flat fee plus a percentage of expenses managed, or simply a percentage of expenses. Sometimes the percentage changes depending on the investment spent; In other cases it will be fixed.
Agencies typically determine what overhead they need to cover and make sure the management fee covers that part, so the variable can be pure profit.
Typically, fixed management fees range from $500 to $2,500, with the variable portion typically running into several thousand dollars.
The percentages are between 5 and 13%.
Some providers prefer to offer more “stability” with an administration fee. Sometimes the cost of the advertising spend is factored in, other times the spend is deducted from the management fee.
Typically, these flat fees range from $2,500 to $10,000 per month. Fees go up or down depending on how much your provider has to do outside of account management.
Requests that may increase fees include:
- Design of advertisements and landing pages.
- Technical setup of conversion tracking.
- Scope creep mitigation.
Finally, some agencies and vendors set up a pay-per-lead (performance-based) structure.
While this may seem most beneficial, it also means that the provider owns the account.
If you know you never want to own PPC internally, this may be a sensible way forward. Otherwise, you’re better off having an account that you own (and can see the work being done on your behalf).
Find out which PPC provider is right for you
While the financial investment is a must, there are many factors that influence what type of provider you choose.
If your budget is less than $2,500 a month, you should probably look into software solutions or manage your campaigns yourself.
That’s not to say vendors don’t make sense; However, you will likely exceed the acceptable overhead if you add a provider on top of the spend.
When expenses are subject to high volatility (especially seasonal expenses), flat-rate pricing may make the most sense.
Accounts with more stable spending histories benefit from the often discounted fees that Percentage of Expense offers.
Typically, if you choose a more expensive provider, you’re investing in a strategist (meaning you shouldn’t be responsible for telling the provider what to do).
If you choose a cheaper provider, you need to be more direct about the strategy you want the provider to implement.
There is no “fixed” rate for PPC management – just like with strategic decisions, it depends on the level of support and expertise.
Do you have a question about PPC? Submit it using this form or tweet me @navahf using the hashtag #AskPPC. I’ll see you next month!
Featured image: Paulo Bobita/Search Engine Journal