Are You Overpaying for a PPC Agency?

PPC Agencies, for the most part, are bullshit, and the way they price their services is a total scam.

Most “big-time” agencies charge by percentage of spend, usually 8-15%.  If your company spends in any significant volume, there is no reason you should be paying as a percentage of spend.  You can save thousands of dollars and get more bang for your buck by switching to hourly management.

The dirty little secret of effective PPC management is that it’s not nearly as time-intensive as agency sales people make it out to be.  I know the pitch:

  • We’re going to look for the magic keywords that the competition won’t find.
  • We’re going to be constantly A/B test all your ads.
  • We’re going to have active bid adjustments so that you’re always bidding the optimum amount.
  • We’re going to be constantly building out and expanding your campaigns.  We will look for new ways for people to find you.
  • We’re going to make geographic, time of day, day of week adjustments on your behalf.

It’s all total nonsense.  Here’s the reality.

  • There is no such thing as a magic keyword.  Pretty much all the best keywords are obvious and your competition is bidding on them, too.
  • A/B testing ads requires a lot of data to roll in which can take months.  A/B tests are easy to set up and don’t take much time.
  • Ditto on active bid adjustments.  It will take a long time to know whether bid changes are effective or not.  This is not a daily task.
  • Most businesses don’t need perpetual expansion in their campaigns.  Unless you’re Amazon, you do a limited number of things, and there are only so many ways people search for you.
  • The data needed to make effective geographic, time of day, and day of week adjustments is so diluted that these changes can be made once every 3 months, usually.

I have clients that spend $25,000 a month and pay me about $500 for management  That is just a 2% fee.  They are extremely happy with the performance of their account and I provide them with exceptional value.  If you are spending less than $10,000/month, percentage of spend might make sense.  Otherwise, look for a dedicated specialist.

Advantages of Paying Hourly

Instinctively, businesses have an aversion to paying for consulting services on an hourly basis for two reasons.

  • The provider might lie about the quantity hours spent on my project.
  • The provider is will spend more time on the project than necessary and bill me.

These two objections are absolutely valid.  You have no way of knowing how much time the provider spent.  Your recourse is that you can ask for more specific documentation on what was done.  But the magnitude is very limit  But take a look at the incentives if you’re paying by percentage of spend

  • You are paying regardless of how much work gets done.  The provider is actually incentivized to do the minimum.
  • The provider is incentivized to get you to spend more, even if it’s not in your interest.
  • The amount you pay increases or decreases based on what YOU do, not based on what the provider does.

This is a perverse payment structure.  Adwords scales extremely well, and the amount of effort it takes to manage a $10,000/mo account is significantly less than 2x the effort it takes to manage a $5,000/mo account.

Chances are you’re getting ripped off!

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