Know the Price

We have discussed what to look for in a paid search team and what services the team should offer.

Now it’s time for the million dollar question. … how should you pay for paid search management?

In the post about hiring the right paid search team, we stress the importance of knowing exactly what you are paying in management fees. While this seems obvious, we are still surprised at the number of companies that do not disclose the breakdown of ad spend and fees.

After doing a bit of research into PPC (pay per click) management fees, you may find that there seems to be little relationship between a campaign’s workload and what an agency charges for that campaign.

The most common way agencies charge for paid search is as a percentage of spend. This is the model we usually follow here at Cardinal, but one set percentage does not work for all accounts.

The Breakdown

Let’s look at two companies with different paid search campaigns:

Client A: Services Business

  • Spends $50,000 per month
  • Offers a single service
  • Running 6 PPC campaigns

Client B: E-Commerce Business

  • Spends $10,000 per month
  • Offers 1,000+ products
  • Running 30 PPC campaigns

If managed effectively, the effort and expense expended in managing the campaign for Client A is far less than what the same campaign should cost for Client B.

Again, given that the campaigns are managed properly, if an agency charges each client the same percentage of spend they’ll make a fortune off of Client A and lose money on Client B.

As you can see, it’s not a perfect model. While percentage of spend is not a perfect model it can work really well with some minor adjustments. For example here at Cardinal we use a percentage of spend but the percentage is not always the same, this allows us to set up pricing that aligns well with the amount of work and more importantly value that the client receives.

 Need to Knows

If an agency charges a percentage of spend, it’s essential to know what’s included in the cost.

Is the agency managing bids? Are they creating new landing pages? Are they running a remarketing campaign? Is ad design included?

We know all of this can get a bit confusing so we have developed a worksheet you can use when evaluating paid search teams.