PPC (Pay Per Click) advertising is a form of online advertising where advertisers pay a fee each time one of their ads is clicked. It’s a for...
The Best PPC Agency Pricing for Your Company
Many businesses opt to outsource digital ads to a PPC agency. After all, it is one of the most lucrative ways to generate revenue and leads for a company, but it also presents the possibility of losing a lot of cash. With an abundance of platforms and PPC management contracts to choose from, answering how much PPC agencies charge can be difficult.
For every $1 spent on Google Ads, $2 of revenue becomes generated. With this being such a lucrative platform, we’ve prepared this article to help you find your way through all the different proposals you’ll receive from agencies. In addition, we discuss which PPC agency pricing structure will be best for your company, so whether you’re a startup with a tight budget or a large organization with plenty of money to spare – you'll learn plenty in this article.
Small Businesses, Startups, & Tight Budgets
45% of small businesses utilize PPC advertising, so as a company with limited resources, you need the certainty of consistent and predictable outgoings. Unfortunately, fluctuating payments, unpredictable outgoings, and randomly enormous PPC agency costs can have catastrophic implications for your company. The best PPC agency for your business will offer you a package with flat-free pricing, hourly rate, or percentage of ad spend.
Usually charged monthly, flat-fee pricing is a set amount for managing your PPC accounts, campaigns, and ads monthly. With this plan, you know that, no matter what, you will pay the same every month. Another benefit is that these are usually short-term month-to-month contracts, meaning you can cancel your package. This model is a preferable option if your budget is low, PPC proves to not work for your business, or the relationship with your agency breaks down.
We recommend agreeing to expectations and guaranteed monthly tasks to be completed by your agency. Then, you can analyze and assess if they're delivering on their promise.
As you might expect, the hourly rate is a set PPC cost per hour. However, this is an incredibly flexible model for businesses that need flexibility, and the budget may vary from month to month. For example, if the amount of cash you can dedicate to PPC fluctuates, you can instruct your PPC ads agency to spend less time managing your account. Alternatively, you can increase the amount if you get an unexpected boost in available funds.
Percentage of Ad Spend
Another predictable contract type for small businesses is the percentage of ad spend. Most companies will have a specified budget they would like to spend on PPC ads every month. Your agency will use this amount to establish how much their monthly management fee will be. Usually, a tiered system operates because the more you spend, the higher percentage they will charge.
For example, if your monthly budget is $5,000, your agency may charge 10%. However, if your budget is $10,000, this could increase to 12.5%. The thinking behind this is an account with a larger budget takes more management. Therefore, when you first establish your relationship with the agency, you should clarify their pricing tiers, enabling you to anticipate how much your PPC contract will cost should you increase your budget.
Larger Business With Flexible Budgets
When you have large amounts of PPC budget to play with, you can be a little more ambitious with your PPC management contract spend. Performance-based contracts typically focus on revenue generated and qualified leads.
If you’re an eCommerce store, this can be an incredibly fruitful package as its ROI is easily measurable. It’s easy to track the revenue that comes from PPC, and you’ll have agreed on a percentage or an amount per dollar your agency will receive based on the money they bring in. Using this model, you’ll never put more money into PPC than you’ll get out.
On the other hand, taking the pay-per-lead route is riskier. As you don’t know the specific amount of revenue PPC is generating and you don’t have the guarantee of each lead becoming a paying customer – you need to be wary. Your chosen PPC agency may be experts in generating a high volume of leads, but if they are poorly qualified, you run into the trap of paying your agency while receiving no cash from said leads.
Milestone Based Pricing
This pricing model is perfect for businesses with goals that target specific metrics above and beyond revenue or leads generated. For example, if you aim to reduce cost per conversion, increase click-through-rate, or improve bounce rate, these are all milestones in your contract.
The agency's success is determined by how effectively and quickly they meet these predefined milestones. For example, suppose they hit all of their goals before the deadline and their rate of pay increases. This strategy is a fantastic way to ensure your agency remains motivated and focused on essential metrics for your business.
One downfall of milestone-based pricing is that agencies will often restructure their pricing. If they’ve saved you $5,000 per month while hitting your targets, they have the leverage to ask for $1,000 per month more. Establishing how much these contracts will cost can be difficult, time-consuming, and costly, so prepare yourself for that.
Which PPC Pricing Model Is Right For You?
It’s utterly dependent on your budget, goals, and flexibility. Most agencies are adaptable to suit your needs, while others will only offer set pricing tiers, so you must do your research and ask the appropriate questions. Additionally, while the pricing and contract need to work for you, you also need to know that the agency is proven and can successfully implement the strategy strategy necessary to smash your goals.
Questions you can ask to discover if they offer the proper contracts and options for you include:
- Have you been successful working with businesses in my industry before?
- Can you provide references, case studies, and data to prove your success?
- What contract types do you offer, and are they tailored and flexible?
- Do you have a plan to facilitate the growth of my PPC accounts?
- How frequently will you provide data analysis and reports on my campaigns?
- Are you flexible to changing budgets, targets, and goals?
You can expand this list based on your specific requirements, but a few will help establish whether an agency can do the work you need at a PPC ad cost that suits your business.