If you’re just beginning to research the efficacy of pay per click advertising, including the cost/pricing/rates/fees for pay per click management, or perhaps evaluating the pay per click management pricing of your current vendor, I’ve summarized several of the possible PPC management pricing models I’ve seen over the past eleven years. Which is the best ppc pricing model? It really depends on your specific situation, but below are a few possibilities.
Per Keyword Phrase Bid Per PPC Account
In this model, the PPC management firm or company charges you a monthly fee based on the number of keywords managed for each of your pay per click accounts.
For instance, if the company charges $15 per month per keyword bid per account and manages 100 keywords in Google Adwords and 75 keywords in Yahoo! Search Marketing, the management fee is $2,625 (100 keywords + 75 keywords x $15 per month).
This seems to be a pretty equitable model. One downside is your costs increase as you add more keyword phrases. The additional costs may prevent some companies from seeking “long-tail” keywords that may not generate a lot of traffic, but may convert very well. A number of low-traffic, high-conversion keyword phrases can add significant profits to your ad click campaign.
This is the traditional advertising agency model. Pay per click management fees are assessed based on how much you spend in your PPC accounts. Most PPC agencies or companies charge fees that range between 15%-30% of your total PPC ad spend.
If you spend $10,000 each month with Google Adwords and Microsoft adCenter and the pay per click advertising agency charges 25% of your total ad spend, their fee would be $2,500.
The major drawback to the percentage spend model is that it may not encourage your PPC provider to manage your ad budget effectively. In fact, the model may encourage some pay per click providers to spend more as their management fee is tied to the ad spend – not performance.
The hourly rate model is used in many professional service firms and has been around a long time. The pay per click campaign management company charges you based on the amount of time they spend managing your account each month.
If they charge an hourly rate of $100 per hour and work 15 hours on managing your click campaign, you are billed $1,500.
The age-old flaw in the hourly rate model is that it encourages “less-than-honest” PPC management companies to be inefficient – more hours for them equals more costs for you.
Pay for Performance
In a pay for performance model, you pay the PPC management company a pre-determined fee per established metric. For instance, you may pay the company $5.00 for each phone call or email you receive from the campaign. Or, you could pay them 5% of each sale generated from the PPC campaign they manage for you. There are numerous options available under this model.
The biggest downside to the pay for performance model is the difficulty in determining a metric that can be easily and accurately tracked and one the PPC campaign management company has total, or at least significant, control over.
For instance, one metric could be a fixed fee per conversion. One critical piece of a conversion, though, is the landing page copy, design and call to action. If the click management company cannot control this aspect of the conversion, the metric cannot be used for billing purposes.
A flat fee model is usually straightforward for both parties. Once the scope of a PPC consulting service or advertising management has been defined, a project or monthly-based fee is assessed.
One of the drawbacks with the flat fee model occurs when the scope of PPC management activities is not clearly defined and questions arise whether a specific activity is included within the fee or not.
Terrakon Marketing’s pricing is flexible and I’m happy to provide a proposal using any of the pay per click management pricing models described. Please feel free to contact me to start a conversation!