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...
4 Types of PPC Agency Billing Explained
No two PPC agencies are the same. They have different areas of expertise, processes, and management styles. Anyone intending to work with one should look into these factors before making their selection.
Unfortunately, it’s hard to get a clear sense of exactly how each agency operates just from perusing their website. Their websites may contain their company’s history, products and services, and methodology. However, that is just scratching the surface.
It’s important to set aside time to sit down with the agency to discern if there is a fit between your needs and what they can provide. By asking the right questions, you will learn more about the PPC agency and determine whether or not they are the right people to help you with your PPC marketing needs.
Getting to Know PPC Pricing Models
One of the things you should know is how PPC agencies bill their clients.
If you are not familiar with how they work, you may be surprised to know that PPC agencies follow different pricing models. As a result, some will appear more expensive than others.
However, you should not look at the numbers alone. It is not only the computation that varies. Agencies can also include different services in their packages, which you should consider as they may help you decide which team is best for your business.
Unfortunately, agencies do not usually disclose this outright on their websites, so you have to ask to find out. However, you do not have to worry about getting caught off guard.
Even though you cannot know how agencies bill their clients without contacting them, you can still prepare ahead.
PPC agencies use four known pricing models.
1. Bill a Fixed Monthly Rate
The fixed price model is where you pay an agency a specific rate every month. Agencies offering fixed rates will emphasize that they provide a complete set of services that can gain long-lasting benefits to your business.
However, be aware that these fixed prices also vary among agencies. Some companies offer as low as $1,000 per month and as high as $4,000.
Usually, going for the lowest amount is the way to go if you want to save money, but you should ask about how they operate at such a rate. There is a possibility that they will not work hard enough to optimize your campaign.
Choosing a more expensive agency may mean better service. Still, you might end up paying too much. The agency may set your campaign aside without performance incentive once it starts performing at an acceptable rate.
The fixed price model is usually the best option for big corporations. Because despite being the simplest among the four, PPC agencies using this model typically require a significant setup fee before they start.
Giving a considerable sum before they do any work is a risk for small businesses that usually do not have this money.
2. Bill by the Hour
The hourly billing model means you will only pay the agency by the hour they work on your campaign. This option may be suitable for small businesses as they can easily track the amount of money they spend on their PPC campaigns.
Still, agencies may not provide you with the best quality of service.
Working by hour gives both parties flexibility, allowing any unplanned tasks to enter the scene. It can take the focus away from the original scope of work set initially.
Too much flexibility usually causes agencies to work inefficiently. They may use up your allotted monthly budget without providing the most optimal results.
You can avoid this by closely monitoring the agency you work with. However, with all the work you have to do with your own business, that may be hard to do.
3. Bill According to Performance
Performance-based billing can mean two things. The most popular is paying according to the number of leads that your campaign acquired based on the PPC campaign the agency created for you.
Hence, you will pay the agency a high amount if they manage to give you a lot of leads. However, keep in mind that having a lot of leads is a good thing as not all of them are relevant.
The other performance-based billing model is through different parameters. It can be the number of clicks on the ads, lead conversion, and return on investment.
If you consider going with this payment model, you must ensure that the agency can provide you with transparency.
4. Bill by a Percentage of Ad Spend
This model is the most used pricing model by PPC agencies. It is not as simple as the other four models, but it is the most logical choice among all of them, not just for businesses but also for agencies.
In this pricing model, you will have to pay a specific percentage derived from the overall amount you spent on your ad. Typically, the agency fees range from 10% to 20% of the whole amount.
One of the positive aspects of following this model is complete transparency. The scope of work will be well-defined. Also, the fees will be set right from the start.
Choosing a PPC agency to work with is a serious matter. After all, it involves spending the money you set aside for online marketing. You have to make sure that you get the most out of your investment.
The research alone takes a lot of work. It is not enough to look at the agencies’ history, services, process, and portfolio.
You have to dig deeper.
Ask all questions you can think of, especially regarding all aspects involving money. Reliable agencies should provide you with all the information you need to decide.
They should be able to honestly tell you if their pricing model will match your business. If possible, they can offer you a better option. If not, you can go to the next agency on your list.