PPC management is quite a varied service offered by a multitude of companies, agencies and people, often each of them working to different methods, systems and beliefs as well as payment models.
It’s choosing the best PPC management payment model that can cause the most confusion, Agencies will pitch that their model is best and substantiate why but here’s an overview of the three most common PPC management payment models.
Percentage of spend PPC Management
In favour of the percentage of spend PPC management payment model is the big plus point that your agency are incentivised to try harder every day, the more they can spend for you the more the agency earns, but of course it’s not just a case of spend, spend, spend, the agency will try to hit your cost per lead/sale targets whilst growing the spend consistently, you know that the agency will work hard and keep doing so, on the down side it may start costing you more than the minimum fee most agencies set as they expand your sales, but then again as it should be linked to the volume of leads/sales you get this is a proportionate cost and of course keeps the agency incentivised to constantly work harder for you.
Yay’s : Low initial cost, you usually keep control of your AdWords account (which can avoid a world of hurt if things don’t work out) The agency is like a sales person on a bonus payment working harder to earn more.
Boo’s : Your initial fixed cost will rise as the spend rises, but it should do so in line with the performance of the account so always a relative earnings to cost ratio.
Flat Fee PPC Management
In favour of a flat fee PPC management model would be the fact that as a merchant you have a fixed cost each month regardless of what the ppc agency does and how much your spend is, it’s quite easy to budget the PPC fees into your fixed costs, but you really have to trust that your PPC agency is going to work consistently hard for their fixed fee, often, as in many advertising agencies, the client will be added to the pool and managed by a junior or even someone not in the UK.
Yay’s : Fixed cost, you know exactly how much your ppc management will cost every month.
Boo’s : Flat fee PPc agencies are hard to scale and make a profit so they rely on having hundreds of customers and lower paid account managers to make a profit, you could just go on the shelf along with hundreds of other merchants and your sales might not grow as expected as the agency has no incentive to work too hard on the account.
Performance Marketing PPC Management
In favour of the performance marketing PPC management option from a merchant point of view would be the fact that it’s a low risk approach, the ppc agency will usually set up the account themselves and fund it, they’ll do all the keyword research and get the account live and driving sales. The main downside is that they’ll focus harder on the products/services which you offer that can make them the most money, not you, so you could find some of your services/products are missing out on sales as they stop focussing on them as much and target higher profit (for them) ones to maximise the return on capital employed.
Yay’s : Performance Marketing is popular amongst the big London agencies and their clients as they feel the agency works harder for their money and they save on having too much cash flow tied up in AdWords
Boo’s : The AdWords account doesn’t belong to the merchant, which can cause enormous issues later if the performance PPC management model doesn’t work out and the merchant wishes to employ another agency. Performance PPC agencies will tend to focus on what makes them the most money rather than what’s best for the merchant. Brand terms may become the biggest drivers as the low profit margin generic keywords are culled as the ROI is less for the agency.
Closing thoughts :
Any merchant looking to outsource their PPC marketing to a PPC agency should take the time to consider the agency and their payment model carefully. Some agencies specialise in working to just one payment method whilst others are more flexible, the payment model shouldn’t be the main concern really as you should look to find a PPC management agency that you feel understands your business needs and expansion goals. Although after 10 years in PPC management we would advise that any merchant thinking about the performance model tread very cautiously and ask for case studies and chat with other merchants currently using this payment model.
We work on a fixed minimum fee and then percentage of spend model although for some clients we are happy to consider working to a flat fee model but it’s not our preferred model as we feel that the client knowing that we earn more if we can drive more sales means that we are always working hard and just being “put on the shelf” is never an issue.
Drop us a line via the “call me back” form to the right of this article or via the contact page to discuss how we may be able to help you move your PPC marketing forward, in most cases we can offer a free 30 day trial after our free no obligation account review and in-depth report.