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2020 PPC Pricing Models - Which One Works Best For You?
Sometimes it can be overwhelming to think about all the various pay-per-click advertising or ppc pricing models.
If you’re new to digital marketing it may seem like a hassle to understand why you're paying a certain way for your marketing needs and understand exactly what you're getting for your money. This article is to help you understand the reason behind each pricing model and which would make the most sense for your business and marketing goals.
In 2020 any business unwilling to invest in ppc is missing a gold mine of leads and sales, but it's daunting to determine the best agency and pricing for your business. Every business has different needs and resources and unfortunately there isn't a one price fits all model for every business. But the truth is the different options are not only good for agencies but also good for business owners.
Learning how and why marketing agencies price their services will help you make the right decision for your business and determine the success or failure of your campaigns.
Understanding your own business and marketing goals is crucial to choosing the correct agency and pricing model. Below are the most common marketing goals.
- Lead generation
- Brand awareness
- Online sales (eCommerce)
While there are many subsets of each of these broad categories such as targeting a hyper specific group or demographic, I believe most marketing goals can be narrowed down to these three categories, so the question remains, which pricing model is best for each goal.
Understand The Different Pricing Models
By definition tiered pricing is a method of ppc pricing used to segment the prices of products and services based on specified target markets. Example: different variations of iPhone with an increased amount of features/space the more you're willing to spend.
- Variety of options for your business giving you control over what makes the most sense for your marketing goals
- Flexibility, usually offering options to upgrade/downgrade
- You could end up paying more per month if desired services are bundled with others you don't need/want.
- Cheapest packages might not be enough to get the results you need, forcing you to upgrade and pay more that you would with other pricing options.
The most straightforward ppc pricing and transparent pricing option. Flat rate is a fixed fee each month, also known as monthly retainer. This allows both the agency and client to understand exactly what payment they'll receive each month.
- Easy to understand and manage
- Both parties know exactly what they'll earn/spend each month
- Easiest for tax & accounting purposes
- Inspires trust and transparency
- Typically comes with a long term contract
- Bad option for businesses not fully committed to their marketing efforts
- Seasonal aspects may lead to ups and downs in marketing campaigns.
Percentage of Ad Spend
In this ppc pricing model, your payment is dependent on your monthly marketing budget. This is one of the most common pricing options in the digital marketing world.
- Agency will be more invested in the growth/success of your campaigns
- Both parties prosper equally
- No need to negotiate monthly fees based on the performance of campaigns
- Can be used as a tactic to increase your monthly budget moreso than your ROI
- Bad choice for business with a limited budget
- Can cause tension between client/agency if client isn't comfortable continually increasing budget upon success of campaigns
This is a very straight forward ppc pricing option. In short you pay for your marketing based on hours on a weekly, monthly or quarterly time frame. This is more common for freelancers or one-time projects
- Control over hourly budget
- Cost effective if you have very small marketing budget
- Good for freelancing or one-time tasks such as a landing page build
- Less incentive or benefit for agency to grow your campaigns past hourly scope
- Expensive if you're in need of a lot of work/management
- Might not see best results if hourly budget is too low
Hidden Costs & Dangers
- Landing Pages - if you have a poor performing website, some agencies will require a landing page, unfortunately if you've already signed a contract and failed to read the fine print, this might come at a hefty addon fee.
- Call Tracking - 3rd party software used to listen to phone calls that come in from marketing campaigns, while this is mutually beneficial for both business/agency it can often come with an additional fee.
- Reporting - no matter the agency or pricing model, monthly reporting should be a staple in any agencies services, we would consider it a red flag if any agency charged an extra fee for reporting.
- Support/Communication - It's vital to have strong communication between clients and agencies in order to ensure both sides interests and goals a being met, while under/over communication can be a problem neither should come at an additional cost.
- Campaign Types & Addons - Display/Remarketing/Video campaigns are usually provided at an extra cost unless discussed upfront before opting into an agency's services. Be sure to understand and ask about these different options before signing on with any marketing agency.
- Make sure you OWN your Google Ads Account - This is perhaps the most important tip of all, it's a unfortunate and shady tactic used by marketing agencies to have complete control over your google ads account. It might seem most convenient at first, a bill comes each month and you move on with your business, never having to venture in the overwhelming google ads interface, but we emphasis under no circumstance should you allow an agency to own your marketing accounts. It's a extremely simple process to link your google ads account to an agency's manager account. Any agency that claims their unable or unwilling to give you full access to your account shouldn't be trusted and likely have bad intentions.
Inbound Revenue Pricing
Digital Marketing Services and pricing options
While there are a definitely more pricing options out there, these are the most common across the board. No pricing option is inherently good or bad and the majority of agencies are pricing based on what makes sense for their business the same way that you should for yours. Before choosing an agency, understand exactly what it is you're hoping to accomplish with any marketing campaigns, and how much it makes sense for you to spend each month relative to the product/service you're offering.