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April 19th, 2010

PPC Management Fees

Profit Percentages (Sales)

There are some companies that are assured that their methods work that they are willing to only charge a percentage of profits that the pay per click campaign generates. This generally makes an agency seem as though they are more of an affiliate type company then an actually management company.

How Agencies Are Affected

This particular type of billing action is risky for an agency. Basically, with agreeing to engage in this type of billing agreement, an agency is agreeing that once the account that they are managing makes money, then they will begin to make money. However, if the account does not make money, this could mean an array of adverse things of the agency. Before entering into this type of billing situation, there are a few things that an agency must evaluate, in order to assure that this is a wise choice to make:

1. What are the conversion rates that presently exist for the company? For example, if a company avidly engages in orders taken by phone, are these orders accredited to the Pay per Click Campaign?

2. Can the website be changed, if the website is not converting any sales?

3. Can you place a bid on different branded keywords for the site?

4. PPC and SEO can traditionally be utilized in order to increase conversion rates; do you have control over the SEO of the site and the display ads that are placed to promote the site?

5. Will the advertiser be able to track all of their shopping carts, analytics, and other billing systems?

6. Is there a way for the advertiser to track their profits efficiently, in a means that relates to their pay per click campaign?

7. The length of the contract. Setting up a new and successful PPC account can take hours to complete. If the advertiser decides that they want to walk away after a profitable campaign has been made, then there is money lost with the setup process.

Be extremely cautious before entering in this specific type of billing relationship. If your company is opened to taking risk, they may also want to begin engaging in affiliate advertising campaigns conjointly with their current campaigns.

How Are Advertisers Affected?

If advertisers are willing to engage in this specific billing relationship, the advertiser should also be involved with an affiliate program. Since the advertiser is only working with one PPC company at a given time, if the company fails to convert sales for the advertiser they will instantly cease spending money, since they are not making a profit. Multi-month contracts can hurt your advertising campaign. Advertisers should be aware of all conversion leaks that come their way, and work closely with an agency in order to turn these leaks into a positive conversion for their company.

Tags: pay per click fees, PPC
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April 11th, 2010

Pay Per Click Management Fees

By examining the billing point of view from an agencies and an advertiser’s perspective, it can be a lot easier to choose the correct contract type where both the agency and the advertisers will be able to succeed in their digital endeavors.

Average Percentage of Spending

This particular method of billing is the most common method that you will come across. Typically, the number falls between ten to twenty percent, but there are times when this number can fluctuate. For instance, if an advertiser is spending around £500 a month, and they are being charged 10% that is only $50 that they have to worry about paying for managerial fees. Normally, this small percentage is too small for an agency to profit from. Advertisers that have a small account should be willing to render a higher percentage for their managerial fees. Advertisers with larger accounts may notice that the amount of fees paid will decrease. For example, in the event that an advertiser is spending one million dollars a month, and their managerial fees are traditionally $150,000 a lot of companies are willing to bring this individuals PPC management into an in-house location. We are not going to emphasize on in-house versus outsourced management, just make a note about how many full time employees could be receiving payment from the managerial fees that you are rendering.

How are agencies affected?

When a company is spending a specific amount of money every single month, then this becomes a predictable amount of income for the agency. If your system is automated or semi-automated then this particular payment method is a lot more profitable in comparison to other types of billing systems. However, if you run a manual system then you will need to evaluate and track down the amount of hours that each analyst is spending per company that they are managing. This could end up producing clients that are not taking an adamant amount of time out on their company compared to the means that they are being billed.

How are advertisers affected?

The more money that you spend, the higher amount of funds you can expect to release to the PPC management company that you have. The issue to look at in this scenario is trust. Set proper limits on the amount of money that you are willing to render every month for advertising, this way you can pretty much predict your bill. You must also be able to trust the company that you have employed. An incentive of these PPC management companies is to have advertisers spend more money each month, so the agency can then begin to see a profit. If the agency is increasing the amount of money that you spend, while your profits are excelling, this is a great option. A common practice of agencies that employ this billing method is to test out an array of keywords and different ad copies so this way you will begin to see results and want to spend more money every month. However, if you notice the amount of money that you are spending is increasing, but your conversion rate for clientele is low this could be an issue with the company you are using not electing to choose correct keywords to help increase the amount of spend. This situation does not qualify as a horrid billing situation. However, it does mean that you need to be aware of the return that you have on your investment. This point is true with any billing situation that you enter into.

Next time we will discuss another PPC price model;

Profit Percentages (Sales)

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