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  1. #1
    Newbie glunnen's Avatar
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    Rate for PPC Campaign Management
    Does anyone know the ball park rates charged for third-party management of a PPC campaign? Is this charged on an hourly rate or fixed amount per month or what? I know this is kind of a vague question but just wanted to see if anyone has anything to share on the subject.

  2. #2
    Affiliate Manager PingoPrepaidCallingCards's Avatar
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    the industry has started to move to a percentage of ppc spend. based on this, you could pay anywhere from 12% to 20%.

    it doesn't give them the best performance goals as they get paid by the more they spend. but this has bin the standard for a while it seems.

    but you'll find proposal's across the board on this. if you can get hourly, at least you know what your paying for. But best is a small retainer and performance based reward.

    good luck

    -Brian
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  3. #3
    ABW Ambassador Lanadili's Avatar
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    The company I work for recently hired a company to handle all the PPC Campaigns, and this company charges 15% on all orders. We did have another company that did this to start with that was charging us 20% on all orders.

    One of these days I might talk the boss into letting me take over the campaigns for a certain percentage

  4. #4
    Affiliate Manager PingoPrepaidCallingCards's Avatar
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    percentage of revenew deals
    you've got a good deal. i'd just ensure that they are always working for you and motivated to keep building out the long tail keywords and not just milking off your brand. This relationship has a good win-win, as long as they keep working for you to keep building the campain.

    good luck
    Brian Hawkins AM @ [URL=http://www.pingo.com/affiliate.do]Pingo[/URL] Earn up to $35 CPA for a [URL=http://www.pingo.com/p/onedollar/onedollar.html]$1 trial offer[/URL]!
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  5. #5
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    the industry has started to move to a percentage of ppc spend. based on this, you could pay anywhere from 12% to 20%.

    it doesn't give them the best performance goals as they get paid by the more they spend. but this has bin the standard for a while it seems.
    Somewhat true that it's become a standard, but don't do it if you can help it.

    but you'll find proposal's across the board on this. if you can get hourly, at least you know what your paying for.
    Most good ppc managers are not going to be enticed by any hourly pay offer.

    But best is a small retainer and performance based reward.
    Yep, or share more data with your finalists being considered and try to model a plan that's only performance based.

    You can visit this thread to see managers themselves chatting about how much to charge - will give you a good view of how varied the landscape is.
    http://www.webmasterworld.com/google...ds/3337581.htm

  6. #6
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    Compensation will vary but the % of spend is the agency model.

    A base + % of sales based upon ROI targets works well.

    mackin@makemetop.com

  7. #7
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    I am of the opinion that % of monthly spend is border line unethical - it entices the PPC manager to boost bids and convince the client to spend more.

    I personally will charge per month + % of revenue generate.

    Smaller clients (spend is, say, $8000 or less) prefer to pay by the hour..

  8. #8
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    I wrote about this in April, in response to a discussion thread on the LED Digest. I wrote:
    Quote Originally Posted by Mark Welch

    Adam Boettiger wrote (in part):

    > In general most [PPC management companies] charge
    > a monthly management fee of 15% of media spend [and]
    > their fee may nullify what they may be able to save you by
    > way of reduced pricing on click bids.
    - LED Digest 2384
    - http://www.led-digest.com/content/view/1787/55/

    I've been amazed for years that merchants pay marketing gurus on a
    "percentage of media spend" for anything, whether it's traditional
    advertising or online advertising, but in the PPC search
    "management" industry, it's absolutely foolish to pay someone based
    solely on the amount of your money that they spend
    . Instead,
    merchants should insist on paying based on the value received, which
    should be a share of the improved profits from "optimizing" the PPC
    campaigns.

    As Jill Whalen wrote in the same issue:

    > You shouldn't be spending 'ridiculously high' amounts
    > on PPC unless you're getting many more times back in
    > conversions and sales. PPC tune-ups by qualified companies
    > or individuals are one of the most costs-effective ways for
    > you to make more money.

    Your goal with pay-per-click search is not to generate profits for
    Google, Yahoo, or Microsoft. Your goal is to generate profitable
    sale transactions at your site. Thus, you should not pay management
    fees based on the amount spent, nor on the number of visitors
    reaching your site, but the improved gross-profit-from-sales (minus
    the PPC costs).

    Since the value of a PPC management expert is often mostly realized
    during a short period, Jill's notion of a "PPC tune-up" is certainly
    worthwhile, and I'd reasonably expect to pay an hourly rate or
    ideally a negotiated flat fee for that service.

    There are many creative ways to structure fees for PPC campaign
    management, but if you're paying for anything other than
    "performance" (meaning success in achieving your specific campaign
    goals), you are probably wasting a lot of money.

    Mark J. Welch

    http://www.led-digest.com/content/view/1788/55/
    Two issues later, I wrote:

    Quote Originally Posted by Mark Welch

    Adam Boettiger challenged my suggestion that clients should not hire
    PPC management companies based on a "percentage-of-spend" basis [see
    issue 2386: http://www.led-digest.com/content/view/1789/55/ ]. He
    noted, quite properly, that very few PPC management companies accept
    that arrangement (he believes I might be the only one), and then
    only for a select few clients.

    Adam is absolutely right -- just as in the traditional advertising
    industry, nearly all companies charge exclusively on the basis of
    either "percentage of spend" or monthly fees. As I wrote, * I don't
    believe in a model where you evaluate or pay someone else based on
    the amount of your money that they spend.*

    Instead, I believe all advertising activity (including traditional
    and online advertising, but most specifically pay-per-click search
    advertising) should be measured based on goals that are meaningful
    for your company, such as "gross profits from sales" or "improved
    gross profit from sales."

    Adam is right that most online businesses won't be able to "engage a
    PPC management vendor on a performance comp model based on an
    increase in the business' profits." That's because because the PPC
    management vendor recognizes that the returns are quite uncertain,
    speculative, hard to measure, or simply unlikely. In many cases,
    there is no "existing data" nor any tracking infrastructure to
    measure performance, and setting up such tracking is an additional
    cost.

    And yes, the few companies who accept clients on that basis do
    cherry-pick their clients, because their benchmark is solely whether
    they are confident they can provide a valuable service to the
    client, not how much the client can afford to pay.

    The key here is an ethical one: I have a very strong ethic that
    holds that I should not accept payment if I don't believe that my
    services are worth the fee I charge. And part of my service, as a
    consultant, is to advise the client on how to spend their money, and
    I specifically advise them whether I think a particular expense will
    result in increased profit. That means that I often give prospective
    clients "free advice" by telling them that I don't believe they
    should hire me, because I don't believe my fees will be justified by
    the returns they should reasonably expect. In other cases, I tell
    clients that I won't accept the work on a "performance" basis until
    they've first made other changes, and sometimes I offer my
    consulting services to be charged on an hourly or project basis to
    help them get to the point where they can switch to a
    performance-based fee model.

    This is similar to the services I provided when I was an attorney:
    for example, I often advised clients that my fees to pursue a
    lawsuit weren't justified by the amount in question, and that I
    wouldn't accept the case on a "contingent fee" basis. (Most aspects
    of the outcome of a lawsuit fall outside the lawyer's control.) On
    the other hand, I sometimes represented clients on a "contingent
    fee" basis, and I frankly told the client that I was doing so
    because I expected to make more money than my hourly fees would have
    justified; I would earn more because the outcome was uncertain and
    because the client couldn't or wouldn't pay my hourly fees up-front.

    It's not unethical for a PPC management firm to accept work based on
    a "percentage of spend" or an hourly or monthly fee basis, and I do
    sometimes accept hourly or "project" work related to PPC management.
    Many PPC firms firms limit their services to simply managing the
    campaigns effectively according to the client's instruction, and if
    the firm doesn't claim to provide advice on how to make a profit,
    then that's not a fair measure of their services.


    I definitely agree with Adam that SEO is a different service from
    PPC management; the SEO work will always be done concurrently with
    many other strategies which will impact sales and profitability, and
    thus it's impossible to measure the real benefits from the SEO work.
    (Indeed, if someone offers to do SEO work based on general sales or
    profit increases, they would benefit from other work the client is
    doing concurrently, even if the SEO work is worthless.) PPC
    management lies on the opposite end of the "measurability" spectrum
    -- results can be measured and tracked very precisely.

    Finally: I am aware of several other companies that accept clients
    on a "performance basis," charging based on specific activity
    derived from PPC campaigns. There are very few, and certainly they
    represent a very small fraction, perhaps less than 1% of PPC
    management companies, and at least one only mentions the service to
    "select clients." But -- although I do like to be helpful and often
    give out lots of free advice -- I'm not going to promote my
    competitors by listing them.

    Mark J. Welch

    http://www.led-digest.com/content/view/1790/55/
    Last edited by markwelch; June 11th, 2007 at 10:48 AM.

  9. #9
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    Mark,

    Well said.

    The only thing I will disagree with is the incentive scale for SEO. If a merchant already has a baseline for conversions from organic search, then you can measure success and sales by watching that base line grow, as the SEO moves the merchant up for different keywords.

    If the merchant isn't tracking conversions, it's a whole other problem.

  10. #10
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    Oziman: I agree that it's possible to structure compensation for SEO with a performance element. However, there have been individuals and companies who have tricked business owners into agreeing to pay a percentage of "performance improvement," and then sought to enforce that even after their SEO work actually damaged the business. (The scenario: the SEO firm's keyword-stuffing or "black hat" work causes a Google penalty for the merchant's site, yet the business grows through PPC or contextual links from other sites.)

    Performance-based compensation is one strategy to encourage good work, but it's not a guarantee against unethical behavior or bad contracts.

  11. #11
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    Quote Originally Posted by markwelch
    Performance-based compensation is one strategy to encourage good work, but it's not a guarantee against unethical behavior or bad contracts.
    100%.. A relative just sent me an email that was in the context of a newsletter/update about how google's new unified search will screw you over and then a link to some SEO firm. I think in the on-line industry it's an issue of ignorance, unfortunately.

    As a complete aside - I didn't know people still remembered BYTE..

  12. #12
    Online Marketing Consultant
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    Some of us charge a flat hourly rate for the setup and creation (excluding phone calls after the inital consultation to learn about your company, products, goals etc....) Then a flat monthly maintenence fee to maintain the campaigns for you. Set-up could cost you between 22 and 140/hr depending on the quality you want and if you use an agency or not.
    Adam Riemer Marketing, LLC. Online Marketing Blog and Affiliate Management Company
    Do you need help with your Marketing or Sales funneling, write me at adamr (at) adamriemer (dot) me

  13. #13
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    Liquidate, why would you exclude the time needed to learn about the company, its products, and its goals? Certainly, you'd already learn some of this during your sales pitch, and I suppose the client would be willing to discuss this at more length if they aren't being charged for the time, but wouldn't it just force you to set a higher hourly rate for the rest of the work?

  14. #14
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    I meant phone calls after that, like an update etc... are excluded (If they do not take a long time and aren't every other day). The phone call to learn about the company is going to be a few hours long and you will normally be charged for that.

    My fault for not writing that correctly.
    Adam Riemer Marketing, LLC. Online Marketing Blog and Affiliate Management Company
    Do you need help with your Marketing or Sales funneling, write me at adamr (at) adamriemer (dot) me

  15. #15
    Affiliate Manager rcampbell's Avatar
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    Good thread. We just hired a company to manage our PPC and we are paying 15% of the amount spent. We used to manage our PPC in house. There is some great info in this thread. Mark Welch is very thorough and detailed as usual.

  16. #16
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    also, with a % of spend deal, a company is going to notice if their money is being wasted just to increase a commission. They will see their ROI drop, and they will ultimately take their spend to someone who will use it properly.

    If you were un-ethical, you could take advatange of an arangement like that... but not for very long.

  17. #17
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    i agree that a percent of spend isn't in itself unethical, there has to be some trust.

    there are some unethical ppc managers who make performance only deals and then fire up adware and pop over their merchant's cart. so it's not the compensation that's evil, it's the actions.

    but i still think performance is best pay method. sales people get paid this way. it rewards the goal and will attract the best talent to your program.

    if you pay sales people per phone call, they focus on making phone calls. you count on their ethics to make them real calls, but still, they think about making calls instead of closing deals.

    where's your ppc's manager incentive to learn more about what he does if he specing all your budget? it doesn't mean he's unethical or even lazy, but performance pay ensures, without a dount, that he's motivated and that his/her goals completely align with yuors as a biz.

  18. #18
    Affiliate Manager PetsWarehouse.com's Avatar
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    We were toying around with outsourcing our PPC.

    I made the rounds at the NY Expo a few weeks ago they were asking 12-15% without exception.
    Bob Pets Warehouse
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  19. #19
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    Quote Originally Posted by PetsWarehouse.com
    We were toying around with outsourcing our PPC.

    I made the rounds at the NY Expo a few weeks ago they were asking 12-15% without exception.
    Where at SES NY? For sure the companies there will be charging like that - they can pick and choose and most old school companies are used to doing business that way anyway so it's a no brainer.

    The thing about PPC is that you can measure results so carefully with any decent analytics manage that to me as a PPC Manager it's a no-brainer to get paid a retainer + % of revenue/sales that you generate. Fundamentally the merchant needs to decide how much they're willing to spend - and that shouldn't be dictated by how much the PPC manager wants to take a cut from. That's my philosophy, anyway.

    I'm a former NYer btw - from across the sound.

  20. #20
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by PetsWarehouse.com
    I made the rounds at the NY Expo a few weeks ago they were asking 12-15% without exception.
    Interesting, but not necessarily compelling.

    Suggest you post a notice on guru.com or elance.com and spell out how you want to pay and see if anyone's willing to bid on it.

    Or contact some certified pro's on G's list and see what their terms are:
    http://www.whoisagap.com

    Make sure you control all of the outlets / channels / distributors that they may use (GYM), some will use adware to improve their resulting roi.

  21. #21
    Newbie glunnen's Avatar
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    Thanks for the replies. Man, this topic is a can of worms.

    It appears that no single model is perfect and offering a couple of options to a client is the way to go.

    Question - Are Pay-for-Perfomance and % of Revenue (or Profit) one in the same? Or is Pay-for-Perfomance sometimes based on other criteria?

    And one other point. The % of Revenue model seems to me to be the best method for both PPC Manager and Client, if properly setup and monitored. But consider the case of a B2B client selling expensive hardware or services to a targeted but world-wide market. Wouldn't it be difficult to arrive at a % of Revenue (or Profit) arrangement for a situation like that? It just seems to me that in some cases this model would involve tangly negotiations and much speculation.

  22. #22
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    Quote Originally Posted by glunnen
    Thanks for the replies. Man, this topic is a can of worms.

    It appears that no single model is perfect and offering a couple of options to a client is the way to go.

    Question - Are Pay-for-Perfomance and % of Revenue (or Profit) one in the same? Or is Pay-for-Perfomance sometimes based on other criteria?
    % of Revenue is how you determine what you will be paid for your performance. In other words, Pay Per Performance is based on the model agreed on between the advertiser and PPC Firm. If it's lead generation, it may be a CPA model, and if it's just traffic/branding it may be a volume goal.

    And one other point. The % of Revenue model seems to me to be the best method for both PPC Manager and Client, if properly setup and monitored. But consider the case of a B2B client selling expensive hardware or services to a targeted but world-wide market. Wouldn't it be difficult to arrive at a % of Revenue (or Profit) arrangement for a situation like that? It just seems to me that in some cases this model would involve tangly negotiations and much speculation.
    The model doesn't work for everything, which is why you generally need to talk to the client and flesh it out exactly what they are looking to achieve. Another model, which I like but others here don't seem to favor so much, is the standard PR model of calculating how many hours it would take to set up the project, run it, etc, and roll those hours into a monthly bill.

    Of course this assumes you charge enough per hour.

    At the end of the day it helps not to be too rigid and work out an agreement that is beneficial to your clients while profitable to your business.

  23. #23
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    glunnen asked: > "Are Pay-for-Perfomance and % of Revenue (or Profit) one in the same? Or is Pay-for-Perfomance sometimes based on other criteria?" <

    and oziman answered: > "% of Revenue is how you determine what you will be paid for your performance." <

    Actually, it can get a lot more complex. Certainly, as glunnen notes, there is a difference between % of revenue and % of profit. My practice is to offer the merchant two options: if the merchant's money is being used for the PPC campaigns, then I am paid a % of gross profit from sales (e.g. sale price minus [cost of goods + cost of PPC]). If I'm using my own money for the PPC campaigns, then of course I almost always require a % of sales.

    One key issue is that many merchants have a wide range of products with different margins -- they may earn an average 40% gross profit on sales of books and DVDs but only 20% gross on sales of computer equipment, and some merchants offer "loss leader" products with zero profit, to lure customers into the store. As a result, you can't always agree on a flat % of sales.


    But of course, there are other options. For example, if there is a perceived "lifetime value" for a client (especially if the first purchase is usually a small "trial" followed by a larger order later), then the pay can be either a per-customer bounty, or an actual continuing commission. In some cases where actual sales can't be tracked (for example, if we're driving traffic into stores or onto phone lines without tracking), then payment may be based on some other criteria.

  24. #24
    Newbie glunnen's Avatar
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    I'm still doing some research into this topic since starting this thread. Here is a PPC Management Pricing model that I don't believe anyone mentioned. Anyone care to poke holes in it?

    Pay Per Keyword: Assess a fee of $X per month per keyword bid per ppc account subject to a minimum management fee of $Y per month.

    So, for example, 50 keywords in Google AdWords and 50 keywords in Yahoo! Search Marketing would equate to a PPC Management Fee of 100 keywords multiplied by $X per month.

    The model emphasizes a focus on a small but well chosen stable of keywords as opposed to many hundreds or even thousands. Proponents claim it makes the client focus on conversions and removes conflict of interest from the PPC manager (i.e. pay per spend model).

  25. #25
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    keyword discovery (and then using them well) is some of the most important optimization work that I do for clients - this throws that out.

    it also is not performance related, so where's the constant motivation for your ppc manager to improve things.

    if i were a lazy ppc manager, i'd charge by the keyword and limit it to 50. :-)

    sorry, nice idea to explore, but if you do this work for others, there's absolutely nothing more rewarding than being paid for performance and hitting it.

    i would feel like i sold my client short, on growth, if we applied keyword limits. managers can handle an enormous number of keywords with ease. at first, if there's too many, you can do things to work around that easily too. the goal is to achieve your clients goals for roi, with the maximum volume you can get while maintaining that roi - keyword limits don't fit my plan of work towards that.

    i'd run from this plan. but, admittedley, i'm not exactly normal. and i assume my clients can achieve normalicality and averagenessitude on their own, without me.

    pay for performance is the only way to fly.

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