Did you know that for every $1 spent on PPC marketing like Google Ads, businesses make an average return of $2? It seems the old adage “you have to spend money to make money” is still valid, even today. Of course, that $2 return is an average, which means it’s not even a sure thing that you’ll make it. You may find you have trouble breaking even, or you might even be losing money on your Google Ad campaigns.
Your success depends on any number of factors, such as the industry you’re in. One of the smartest things you can do is look into the services of a professional team of Google Ad managers. They can help you build campaigns that will net even better returns for your business. You might worry that partnering for Google Ads management will eat into your budget and your profits. To that end, you’re wondering what a reasonable management fee looks like. If this sounds like you, then this guide is what you need. It looks at how agencies decide Google Ads management fees, as well as the costs of effective service.
Pricing Models for Google Ad Management
The first thing to know about Google Ads management pricing is that there are a few different models. What you pay depends a bit on how your partner structures their pricing.
The different pricing models can make it difficult to compare services between providers. Make sure you understand which model any agency uses, as well as what’s in their service.
Once you understand this, you’ll have an easier time comparing plans. It will be much easier to assess the value any provider is offering.
So, what plans are providers using?
Percentage of Spend Models
Many agencies use what’s known as a percentage of spend model. They’re easy to use, and it’s clear how much you’ll pay.
Suppose an agency charges 20 percent of your ad spend. If you spend $100, you’ll pay the agency $20. If you’re spending $5,000, you’ll pay $1,000 in fees to the agency.
It’s important to note here that many agencies use a sliding scale to structure a percentage model. That means they’ll have different tiers, depending on what your monthly ad budget is.
In most cases, the more you spend, the lower the percentage will be. The company spending $5,000 on ads may pay 15 percent, instead of the 20 percent paid by a company with a smaller budget.
This is good news for companies with larger budgets. They can take advantage of cost savings as their spend increases. For companies with smaller budgets, the percentage model may not make as much sense.
Fixed-rate models mean that you’ll pay an ad management fee. This fee is flat, which means it doesn’t change based on your ad spend. You can spend $1,000 or $10,000, and you’ll pay the same fee.
The fixed-rate is not usually a flat rate charged to all customers, though. Instead, you’ll usually be offered a customized flat fee, which reflects the specifics of your account.
So, the customer spending $1,000 on ads will not likely pay the same as the company spending $10,000. That’s because the company spending $10,000 will likely need more support for their campaigns.
Other factors may come into play, such as the industry you’re in and how competitive the market is. If you want the agency to help you with creative, you may pay a higher fee.
All these factors will be negotiated with the agency before you sign on the dotted line. They’ll usually appear in the quote, so pay attention to what the agency is offering. You may need more or less in terms of service.
Finally, there’s the hourly rate model. In this pricing system, the agency charges you by the hour for the management of your Google Ads.
This model can be affordable if your ads don’t need a lot of management. The more extensive your campaigns, though, the more time they’ll need. That can result in much higher fees, which can make this model a poor choice.
Other Models and Fees
Two less-common models are the management fee plus the percentage of ad spend and the performance-based model.
In the management fee plus percentage model, the agency will charge a flat management fee. They’ll then also charge a percentage of ad spend. The percentage is usually lower than what’s charged in a percentage-only model.
The management fee may also appear to be lower than flat-fee models at first glance. Be sure to add the percentage part and the management fee together to see what you’re paying. In some cases, these fees end up being much higher.
Performance-based pricing is usually based on other metrics, such as a price per email inquiry. It’s sometimes called “call to action pricing” for that reason. In some cases, the agency might negotiate a commission on closed deals.
It can be attractive because it can result in lower fees since you’re only paying for effectiveness. It can be difficult to manage, though.
One other fee associated with almost all accounts is a one-time set-up fee for your Google Ads account. If you switch providers later on, you’ll likely need to pay set-up fees with the new provider.
Some providers will offer a basic management fee, which includes so much per month. Anything beyond that will include an extra fee. These plans can seem quite attractive upfront until you realize you need more than what’s included.
What Should be in Google Ad Management?
No matter which pricing model an agency partner uses, you should think about the value of the service. To that end, you need to know what’s included in your management package.
You’ll likely want to hire an agency partner that can provide management for all kinds of ad campaigns:
- Paid search
- Display ads
- Local ads
- Mobile ads
- Product listings
Of course, you should make sure the services offered match the services you need. If you don’t have any products to list, then finding an agency partner that specializes in this area isn’t a good plan.
You may also want to seek out an agency that can do more than just Google Ads. Bing, LinkedIn, and Facebook also have advertising platforms you may want to leverage.
Next, you’ll want to check the terms carefully. How many keywords do you get in your management fee? How will the agency measure performance?
If you need help with creative or other aspects of PPC marketing, then you’ll want to see if these services are included. If they’re not, you’ll want to discuss them with the agency to see if you can add them later.
Budgeting for Management of Google Ads
Now you’re familiar with standard pricing models, fees, and some of the services your management package should include. You want to know how to budget.
This is probably the trickiest part of any PPC campaign, whether it includes management or not.
Think about What You Need
Before you think about budgets, in particular, be sure to think about what your business needs. If you need help with creative, you’ll pay more than if you need someone to handle the backend work.
You should also think about the level of service you need. Are you happy with a hands-off approach, or do you want to be more involved with the campaigns? The deeper you dig into the nitty-gritty of PPC management, the higher the fees are likely to be.
Do you need keyword research, or have you done that yourself? Are monthly adjustments to your ads frequent enough, or do you want to make adjustments more often? Reporting frequency is another factor to consider.
The more you demand of your service provider, the higher the fees will likely be. Of course, the old saying “you get what you pay for” applies here. Closer management usually results in better performance and improved insights.
The more you need, the more you should plan to budget for management.
A Good Rule of Thumb
You can probably expect to pay up to 30 percent of your ad spend. Using this as a baseline or “maximum” can help you budget for good management services.
If you plan to spend $5,000 in ads, then you’ll want to budget $1,500 for management fees. Of course, you may be able to find a provider who offers a lower percentage or one who uses a fixed-rate model that will charge you less.
Which Model Makes Sense?
Finally, you’ll want to ask yourself which pricing model makes the most sense for your business. For many business owners, using a percentage of ad spend is the simplest and most cost-effective method. Since the fees use a sliding scale, your costs are always tied to the level of campaign you’re running.
For a business that expects to need more support or has a minimal budget, then a flat-fee model could make sense. A “basic fee” model could be the right choice if your business is just starting out with ads and doesn’t need much support. If you find you’re opting for “add-ons,” though, it may be more effective to look at another pricing model.
Hourly fees may make sense for small, simple campaigns. As management becomes more complex, this model becomes less cost-effective. Instead, consider percentage-based or flat fee models.
The good news is there’s an agency out there that will be able to accommodate both your budget and your campaign needs.
Measuring ROI for Google Ads
You might wonder if adding management to your Google Ad campaigns is worth it. After all, if you’re spending $5,000 on ads and then another $1,500 on fees, your budget is now $6,500.
The more you spend, the more you need to earn to break even or turn a profit on your ads. Will adding management help you achieve a better return?
The answer is usually yes! Campaign management comes with a price, but it allows you to hire on a team of PPC experts. They know the ins and outs of managing campaign performance.
Their expertise will help you spend your ad budget in a smarter way. You can find cost-effective keywords and compete more effectively. Smarter bidding will help you maximize your budget so that you can hit your campaign benchmarks.
The right agency will also help you develop better ads. With more compelling creative, you’ll see your ad performance improve.
The takeaway? Hiring the right agency will help you get more clicks, discover more leads, and close more deals. In turn, your Google Ads ROI will increase.
At the outset of this guide, you saw that marketers earn an average of $2 for every $1 they spend on Google Ads. You were cautioned that this figure was just an average, which means some businesses earned less.
It also means some businesses have even higher profit-to-spending ratios. With the right Google Ads management team in your court, you could become one of those businesses.
Get the Insights You Need
It can be tough to pin down exactly how much Google Ad management should cost your business. This guide has illuminated the different pricing models in use, as well as highlighted some rules of thumb for budgeting. You should have a better idea of what you can expect to pay for good Google Ads management, as well as how you can make sure you get the most from your services.
Ready to take your Google Ad campaigns to the next level? Schedule a Google Ad audit with the experts and discover all the ways you can get more out of your campaigns. Get in touch now, and get ready to grow your marketing like never before.