Evaluating what to budget for PPC management can be challenging with opaque and varying fee structures across agencies. From setup costs to retainers to ad spend commissions, actual rates run the gamut. Here we’ll break down the typical ppc advertising management pricing models and factors that impact costs to help set realistic expectations when seeking a partner.
Monthly and Annual Retainers
Many PPC agencies charge an ongoing flat monthly or annual fee for core management services separate from actual media spend. Retainer amounts vary based on:
- Account scale and complexity – Enterprise accounts with thousands of keywords and expansive targeting options warrant larger retainers than simple campaigns.
- Level of management – Strategic advisory services command higher fees than basic implementation.
- Included deliverables – Retainers including detailed reporting, creative production, lead gen services etc. exceed barebones optimization-only fees.
- Minimum guarantees – Some agencies establish minimum monthly or annual retainer amounts regardless of actual hours worked.
Average monthly retainers range from $1,500 on the low end for basic management up to $10,000+ for enterprise strategic services. Yearly retainers typically span $12,000 to $120,000+.
% of Ad Spend Model Some agencies charge an agreed percentage of the total media dollars spent rather than a fixed fee. Common percentages range from 10% to 25% of ad spend.
This aligns incentives by rewarding agencies for driving higher ROAS and spending. But it risks overspending if not governed properly. Monthly minimums based on historic averages help avoid extreme downswings.
Flat or Hourly Creative Fees
On top of retainers, additional creative work like developing new display ads or optimizing landing pages often incurs separate fees, either hourly or at a predefined rate.
Typical hourly rates range from $60 to $200+ depending on the level of talent. Flat fees for specific creative deliverables like a new ad set might range from $500 to $5,000.
Account Setup and Onboarding Costs
The initial investment for new accounts covers elements like strategic planning, account buildout, technical integrations, and onboarding. These one-time setup fees span from around $500 on the very low end up to $10,000 or more for large-scale enterprise builds.
Ongoing Platform Licensing Fees
Some agencies bake the costs of analytics, bidding, reporting, workflow and other software tools into their core fees while others charge separately for platform access. These recurring tool costs can tack on hundreds to thousands per month.
Markups on Ad Spend
There’s debate around agencies applying margins on top of actual ad costs. Some charge an additional 10-30% on media spending with no transparency. More ethical agencies exclude any hidden ad markups or commissions.
Value-Based vs. Hourly
Billing Some agencies tie billing directly to hours actively worked on the account. But others charge fixed fee retainers not based on time investment, freeing the team to allocate effort however most effective.
There are benefits to both hourly (fairness) and value-based (flexibility) models depending on management preferences.
Measuring Return
When comparing proposals, look at both the total cost and the tangible results delivered for other clients. A higher-priced provider with a proven superior performance history may warrant the premium over untested lower-cost options.
Typical PPC Agency Fee Ranges Based on current industry norms, average PPC management fees tend to span:
- Setup fees: $500 – $5,000
- Monthly retainers: $1,500 – $10,000
- Yearly retainers: $12,000 – $120,000
- Management fee %: 10% – 20% of spend
- Minimums: $1,000 – $5,000 per month
- Ad spend margin – 0% to 30% (aim for 0%)
- Creative fees: $60 – $200 per hour
Managing PPC successfully requires real investment. But anchor costs to value delivered rather than benchmarking alone. With the right partner, higher fees more than pay for themselves through superior execution and technology capabilities.
If proposals seem outrageously high or low, look deeper at included services, ROI validation, and expertise. PPC done well drives tremendous revenue impact, justifying serious budget. Focus on real capabilities over cost alone.