Pay Per Click (PPC) has become an increasingly profitable marketing tactic for many businesses across many industries.
Since there are few true experts in the discipline of PPC, businesses are contunie to look for outside help from marketing agencies to manage their PPC campaigns. As a marketing agency who offers PPC as a service, we have had numerous clients, previous and current, ask us what they should spend as a budget and what a typical management fee looks like.
There seems to be a portion of agencies manipulating their clients ignorance about the service, so we’ve decided to address the question of “What should I be paying for PPC?”
For starters, I want to be very clear that there is no cookie-cutter solution to paid search pricing models. Every agency is going to be different, and every client within an agency will have a unique pricing plan that is tailored to their specific needs and budget. So before I can really answer whether or not you are paying too much, there are some things you will need to consider.
What is your PPC campaign size?
Campaign size is the first thing I would think about before even starting to recommend an ad spend or management fee.
For example, if you are running a PPC campaign specific to Dallas – Fort Worth, the amount of research and management would be very different compared to a campaign that is targeting the whole United States.
Also, the amount of services and/or products you are offering comes into play. If you sell men’s tennis shoes, a campaign of that size would be different to a retailer who sells Men’s, Women’s, and Kid’s shoes. The larger the campaign, the more research and monitoring will need to be done to the campaign.
Getting a lot of clicks on your ad campaign is great, but as a marketing agency, Steadfast is very committed to making sure all of those clicks are “qualified.”
Just to put an idea out there with respect to what research and management means, I will break down a typical day of campaign management. I start literally every morning checking the campaigns that I left the afternoon before. In the Google Adwords dashboard, I check to see if conversions went up and make sure budget was hit without going over. Then I’ll hop into the Search Terms Report to see what people were searching for to be served your ads, ensuring the traffic and conversions were considered qualified as well. Lastly, I look at the search terms to see if there are any trends or opportunities I can optimize for to increase qualified conversions.
Depending on how big the campaign is, this could take hours. Going through individual locations, products, and services to make sure every campaign is optimized can be a daunting task.
What is your PPC budget?
Budget, just like campaign size, directly affects the amount time it takes to manage a PPC campaign. A lot of marketing agencies will use a pricing model based on a percentage of their clients’ spend because of this.
For example, if you are spending $10,000 an agency would take 20% of that for management. So, on top of your $10,000 ad spend, there would be an additional $2,000 to manage that campaign each month. That would be inclusive of the research and management I mentioned above.
The more money you are spending, the more clicks are coming through, which means a longer search terms report and more research & management.
In theory, this means if you want to put more money into your campaign your monthly management spend will go up. There are other versions of this that are beneficial for the relationship (both for the agency and client).
A lot of agencies will utilize a “Simple Slide Scale” pricing model which means if you choose to spend more your percent for management fees will drop. For example: if your campaign is doing really well and you want to add another $15,000 a month, some agencies will reward you for spending more money with them and could possible drop your percentage from 20% to 15%. Of course this will vary from agency to agency, and from client to client, but this model does exist and it is one of our favorites at Steadfast because it ensures our clients are getting the most out of our relationship.
What are your business goals?
Depending on your business goals, the above two points will fluctuate, causing the amount of work on your campaign to differ.
If your goal is to grow your business through PPC 30% in the next year there will be a very different amount of work as opposed to growing your business 300% in the next 3 years. If your business goal is brand awareness that would also be a very different budget. Just for some context, in the event that you do want to grow your business the amount of work would be very heavy upfront. Focusing on building and structuring the campaign to reflect your business goals. Doing the keyword research and creating the right campaigns and ad groups with the messaging to achieve these goals. Moving forward after that, monthly maintenance will still be required to ensure all of the search terms, conversions, and leads are qualified.
Choosing a goal like growing your business would be best matched with a percent spend pricing model, where your budget will directly affect the amount of work being done and thus the amount of growth coming from the PPC campaign.
The Steadfast PPC Approach
Here at Steadfast we realize there is no one cookie-cutter solution to a perfect pricing model for PPC. So for every new client that comes in for PPC, we do extensive research and craft a perfect plan.
We study their industry, their target market, and strategize a plan & price that will be a successful campaign for our clients. Each client has a personalized PPC strategy and budget recommendation. Though every client is unique we at Steadfast like to blend two pricing models.
At Steadfast we have made a hybrid of a fixed rate and percentage based pricing model. We find this works the best for us and the best for our clients. We will choose a monthly fixed rate for management. This covers all of the upfront maintenance in creating a campaign and monthly maintenance to make sure the campaign is profitable and successful for our client.
Secondly the percent spend we take is for what we like to call a “A-ha moment.” This can be anything from a seasonality change we need to make out of the blue, or a change to optimize a part of the campaign that we notice will do really well with a little extra love.
So there you have it, all of our secrets are on the table. Unfortunately in this blog post there is no legitimate way for me to judge your PPC campaign expenses, but I hope we have helped you understand a little more about the pricing models that exist, and how’re they get applied.