OK time for a deep dive – the various approaches for handling Google ads setup and management fees.

Percentage of ad spend, fixed management fee, conversion-basis, fixed setup costs, no set up cost but higher fees… There are many ways that ad managers structure their process for handling the set up and management of clients’ Google ad campaigns. Let’s look at a few of the different options, and then we’ll explain how we do it and why.

Percentage of ad spend

With this option, the agency takes a % cut based on your monthly ad spend. So if you were spending $2,000 per month on ads and their cut is 25%, their monthly fee would be $500, and your monthly total would be $2,500. The reality is, from the agency’s perspective, this model really only works for clients with bigger budgets. If the client was only spending $500 a month, a $125 management fee is pretty light. The risks with this model are if your budget fluctuates a lot then you don’t have a fixed monthly fee or consistency; and if your budget is really large, then your monthly fee could be very big as well!

Monthly management fee

Some agencies just charge a fixed monthly fee for managing your campaigns. This will vary wildly between agencies. Generally, this should be directly related to the size of your campaigns and how many campaigns you are running. For example, if you are running one Google Display campaign with a $10 daily budget, the time it will take to manage this campaign is small, versus having 5 or 6 more complex campaigns, where the time would be significantly more. However, some agencies will charge the same flat rate regardless.

Hybrid model

Some agencies use a hybrid model of the above two. They will take a percentage cut based on the ad spend, and they also have a fixed monthly management fee. In this scenario, usually the agency is paying for the ad spend themselves, and then billing you for it. So the % cut almost acts like an “insurance” or fee just to have them manage your account. And then on top of this they also have a fixed management fee for the day-to-day running and optimisation of your campaigns. This is the most expensive option, and is generally not very feasible for smaller businesses.

Setup costs

As well as the monthly fees for managing your account, before you start, your campaigns have to actually be created. Depending on the type of campaign, how big it is, and how many campaigns you need, this can take some time if its done properly. After doing some looking around, there are 3 main options for how agencies charge for this:

1. No set up costs, but they charge a % of ad spend – sounds too good to be true right? The risk here is that you may either be pushed into spending more than you need to be so they can get their cut; or the campaign setup will be a quick turn around to keep their cost down. Red flags either way.
2. Fixed rate regardless – if you have a large, complex account and campaigns then this may be warranted. But for most everyday clients that don’t have complex needs you’ll end up paying more than you need to.
3. Flexible rate depending on your campaign needs – the fairest in our books, as you pay for what you need and there’s nothing hidden.

So how do we do things at The New Black, and why?

We try to make Google Ads as simple and accessible as possible. We charge the setup based on the campaign complexity and how many campaigns there are, so you don’t pay more than you need to to get your campaigns up and running.

For monthly management, some agencies will charge a percentage of ad spend – we don’t do this.  We want clients to feel confident that we’re squeezing everything out of their budget that we can by having properly targeted campaigns and using efficient monitoring techniques with your end goals and relevant conversions in mind, rather than just hiking ad spend to get more click through!

So, we charge a monthly management fee, which is dependent on the complexity and size of your campaigns and account – it’s not a “one size fits all”. What we charge is based on the actual time we think it will take to effectively manage your account within the constraints of what your budget may be. This approach works for us and our clients, and doesn’t reward us for simply increasing your ad spend (or penalise you for having a small budget). Your monthly fee also includes a report at the start of each month showing you how your campaign(s) performed, so you can track what’s going on.

We find this is the simplest and fairest approach, and it works for our clients because they have certainty about what they’re spending each month, with less moving variables.

We also don’t lock people into contracts – once your campaigns are set up and running, you can stop them at any time, or move them elsewhere if you wish. This makes sure we constantly strive to get good results. And we work with you to achieve this.

If you’re keen to get started with Google Ads, get in touch and we can work through the options for you.