When you start using PPC ad management, your ultimate goal is no doubt making money. So, the last thing you want to do is spend more money before you even get started. Sometimes, this additional outflow of finances, however, is exactly what you need to create the most efficient and profitable ad campaigns.
It is important to understand what types of PPC management pricing modes are out there.
Keyword pricing models are set up to charge you a monthly fee based upon the number of keywords that have been managed for each of your PPC accounts.
Say, for instance, that the charge is set at $10 per month per keyword bid per account. If there are 100 keywords in your Google AdWords campaigns and 50 keywords in Yahoo, the formula for what you will be charged at the end of the month looks something like this:
100 keywords + 50 keywords = 150 keywords X $10
For a total monthly fee of $1,500
On this model, your costs will go up as you increase your keyword phrases. This expense may discourage you from using certain keyword phrases that don’t generate tons of traffic but tend to convert well to actual sales, often even large profits.
This hourly rate model is set up exactly how it sounds – you pay your PPC management company a fee based upon the amount of time spent managing your account each month. If, for instance, their fee is $50 per hour, and they work on your campaigns for a total of 10 hours that month, then you will be charged $500.
The main downside to hourly rate pay is that it encourages the company to spend more time on projects that may not require that much time spent for the sole purpose of billing you more.
The flat fee pricing method is the most clear-cut way of charging for services. A monthly fee is determined based upon services.
When the PPC management company does not clearly define what is covered as part of their services, the flat fee may become an issue of contention. Be sure to clarify from the start what is included in the price and what is not.
The percentage model fee is based on how much you spend on your PPC ad accounts. The percentage model is a widely accepted pricing model for ad agencies. The typical percentage range to expect to pay is between 15% to 30% of your total.
Since your cost is connected with how much you spend on the ads, this model may not prove to be the most profitable, since the final cost is based off of total amount spent and not on how well the ad actually performed in bringing you profits. However, agencies are interested in building long term relationships with their customers, thus legit agencies would stay away from those practices.
Pay Per Performance
The pay per performance pricing model is set up exactly how it sound. You pay a price based upon how well your ads perform. An example of this would be, for instance, that you pay the management company $1 for every response you receive as a result of the ad campaign. Alternatively, you might agree to pay a percentage of each sale that is generated directly from the PPC ads that they manage on your behalf.
The largest obstacle in this pay per performance model is determining an accurate tracking metric for responses that are not controlled by the management company as well as creating a partnership relationships that might not be beneficial for the business.
Now that you have a better understanding of what types of PPC management pricing models are out there, it’s time to determine how you want to spend your money. Never lose sight of your ultimate goal. You want to create the best ad campaigns for the least amount of overall cash outflow and the most amount of potential profit.