Pay Per Click (PPC) Management Rates

We approach PPC Management with a very different philosophy than most. Our philosophy is that keywords should be selected and managed if they convert and achieve your business goals. Conversion can be defined as immediate revenue or delayed revenue such as a lead.

As a result we do not typically advocate clients have hundreds or thousands of keywords. Instead most of our clients generally have 150-300 keywords and we manage them to achieve a targeted conversion metric such as Cost Per Sale/Acquisition or Cost Per Lead (if conversion can be measured.)

In short, we assess a fee of US$14 per month per keyword bid per PPC account, subject to a minimum management fee of US$1,750 per month. Therefore, if you have 60 keywords in Google, 65 keywords in Yahoo! Search Marketing, our PPC Management Service Fee is 125 keywords x $14 per month = $1,750. It turns out that our PPC Management Fee equates to less than US$.50 per day per keyword.

We believe this approach to bid management is superior as it removes a conflict of interest for the vendor and it encourages clients to focus on conversion.

In comparison, there are 2 other PPC management models:

1. Percentage spend
2. Pay per performance

The prevailing model is a percentage spend model where you pay a company a percentage of the monthly spend to manage your bids. This fee typically ranges between as low as 5% to as high as 30%, where 15-20% is the norm, subject to monthly minimum. Hence, if you are spend US$10,000 on Google and US$5,000 on Yahoo! Search Marketing, their management fee assuming 15% would also be US$2,250.

The major flaw in this model is it does not encourage the vendor to manage your budget effectively. In fact it encourages the vendor to spend more as their management fee is tied to the spend - not conversion performance. Worse yet - bids keep increasing year after year - which means their fee keeps going up.

The other major model is pay per performance - where you pay the vendor to achieve a specific outcome. Usually it works with a flat fee for action - as in US$10 per conversion. On the surface, this approach seems ideal until you learn the tail is wagging the dog. For example, we do business together. I am now sending you customers and you are paying me US$10 per new customer. All of a sudden I am approached by your competitor who offers me US$12 per new customer or a 20% premium to your fee. Get the point?

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