There are many ways to price management of pay per click campaigns. Last April, four pricing models were addressed at Search Engine Land. But what is an appropriate fee? Kevin Lee, of the Didit agency, believes PPC management fees may be too low. He states that he has seen fees below 10-20% of ad spend, and the former article states that fees are typically between 5% and 20% of PPC spend. While there are several models of charging for PPC management, I’ve always believed it to be a standard industry practice to charge around 15%. I have, however, seen incredibly low monthly fees, based on rates in the range of $15/hour, as well as percentage based charges at less than 5%.

So what is a reasonable management fee? Honestly, I don’t know that I have an answer. But I can say that agencies don’t all work solely with PPC. If an agency works in site design, copywriting, SEO, social media, and a slew of other services, and are good at what they do, they often charge premium fees for the quality of their work and their expertise. What would be a reasonable management fee for a prospective client looking to spend $1000/month in the PPC ad networks with no other work for the agency? Say an agency decides to charge 15% of the PPC ad spend. In that agency, they will see revenue of $150/month. If the person managing that PPC account can be billed out to clients on a site design for $300/hour, the agency would effectively lose money on the PPC client if the employee spent more than 30 minutes managing the campaigns over the course of the entire month.

Employee on Site Design Job = $300/hour.
Employee on PPC Management = $150/month.
Half an hour on site design job = $150.

The employee above would not want to spend more than 1 minute per day managing the accounts to stay profitable for the employer.

I can tell you from experience that managing a PPC campaign takes more than 1 minute per day. Even with Google’s Adwords Editor, or a 3rd-party PPC management tool, it takes longer than 1 minute to understand the top-level numbers, and reporting on them or making changes is time on top of that.

So if you’re going to pay even the industry rate of 15%, it begs the question of how much time will the PPC manager actually spend on your account? If an agency charges $30/hour for all work, they might be able to spend enough time on a $300/monthly PPC management fee (on a $2,000/monthly PPC spend) to make your campaigns work. Similarly, an agency who bills some tasks at $200 or more for consultations probably won’t make money on you as a client if they spend too much time on a $300/monthly fee, and might be doing you a disservice.

Certainly you should not be purchasing PPC management from an agency based on pricing alone, but it’s important to understand the agency side of things. Now, it’s also important to understand that an agency who does charge 15% fees may be willing to “lose” money on a client, as it’s really the opportunity cost that is lost. If the agency does not do a whole lot of site design at $300/hour, they may gladly spend the time and energy on a PPC campaign that is effectively a $20/hour job.

And that’s not to mention that agencies may pay their employees accordingly. Perhaps PPC management does not cost as much, but the employees are similarly not compensated as well as one who can do site design. Agencies often have very distinct roles for employees, so they don’t run into the issue of wanting to put an employee on one job as opposed to another.

So when selecting a partner for PPC management, find out more about the process and what is included in the management fee.

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