Grudge Match – PPC fixed fee versus percentage of PPC spend

In the blue corner weighing in exactly equal amounts each month with transparent specialist work hours is the common fixed fee Pay Per Click (PPC) price plan.

In the red corner we have the mostly used, unpredictable but incentivised percentage of pay per click spend management fee.

These two PPC payment methods have had agencies duking it out for years – but which one really is the best? Only one way to find out!

LETS GET READY TO RUMBLEEEEEEEEEEE!!!!!!!!

Round 1

‘Their quote was cheaper than yours’

So to begin, the percentage of spend price plan allows agencies to recommend or take a starting budget and charge a percent of that spend. These percentages are most likely unknown and may change to best suit the agency.

Let’s say the agency suggests a starting budget of £4000 pounds and will charge 10% of that spend as their fee (£400). Comparing this to industry averages, means you will get around 4 hours of a specialist time – not ideal for a 4.4k investment. This questions what the agency’s real objectives are.

The fixed fee billing method enables an agency to gauge how much work is required for effective management on the paid search campaign. It also demonstrates how much specialist time the pay per click account will receive – £600 = around 6 hours a month based on industry averages. There is no room for bias in terms of click spend and allows the agency to recommend and work with the client to determine a starting budget.

Round 2

‘But in the end of the day I want results and a percentage of spend will incentivise the agency to provide the results so I ultimately invest more to get more results’.

Ok this could be a genuine statement, an agency which uses the percentage of spend option will want to make more money and by demonstrating results may make the client want to invest more. More investment means more money to the agency.

Fixed fee on the surface may not provide any real cause to motivate the agency to better results. However an agency is a business in the end and a retained customer who may refer other business is better than a client who leaves and is never heard from again. A happy client may provide a positive review or case study which will increase chances to impress other potential clients.

Round 3

‘My main goal of pay per click is to achieve a positive return of investment and then further increase the investment to get me higher returns’.

Most agencies are ‘ROI driven’ or ‘ROI focused’ nevertheless, how will you ever achieve the best return possible if an agency takes more and more money when you increase your investment for a better return.

A fixed fee, stays the same even if you increase your click spend to further the return and therefore you the client will get the best return possible.

James Alexander

Client Stories: The League of Friends, St Mary’s Hospital Portsmouth

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