How Much Does PPC Cost and What is Pay-Per-Click Advertising?

by | Jan 22, 2020 | advertising, blog, PPC

What is PPC? How much does PPC cost? Who should I hire for PPC? Do I really need PPC for my business? All of these questions come up a lot with our clients and prospective clients. And we’re sure glad they do because asking the right questions sets businesses up for success!

The world of PPC can be an intimidating one—dominated by numbers, percentages, and murky expectations and deliverables. We’re here to clear all that up for you. If you’re looking for a women-owned PPC agency (and digital marketing as a whole), or want to make sure you pay the right price for this service, read on. This guide will help you make the best decision for your business and feel more confident in your PPC program.

What is PPC Advertising?

Let’s start with the basics, shall we? PPC advertising, also known as pay-per-click advertising, is an advertising program you run on Google or other search engines. You’re billed every time someone clicks on your ad and travels to its link destination. PPC is going strong because it works. According to Hubspot, about 50 percent of people click on text PPC ads—and companies make two bucks on every dollar they spend in AdWords. Not too shabby!

Do I need PPC for my business?

PPC benefits businesses in many industries. Businesses utilize PPC advertising because of its ability to target a very specific audience, bump business websites and landing pages up to the top of search results (in comparison to organic SEO you have to earn the ranking for), and convert more leads.

That being said, whether you need pay-per-click advertising comes down to your goals and budget—because you also need to factor in organic SEO. PPC works best when paired with strategic SEO tactics like SEO-optimized blog posts and regular SEO audits. So….

How Much Does PPC Cost in 2020?

Luckily, PPC pricing is pretty standardized from PPC agency to PPC agency and freelancer to freelancer. The same goes with paid social media advertising. What you spend on PPC is also up to you. Some agencies don’t require a minimum ad spend, while others do.
So how much does PPC cost exactly? Here are the pricing breakdowns marketing agencies typically use to price out PPC management. Also, keep in mind that most individual PPC managers and PPC agencies will charge a start-up fee. This is standard practice to cover the time it takes to set up tracking, landing pages, review historical data, and sync your Analytics and other accounts if necessary.
Ad Spend Percentage Plus PPC Management Fee

This is the most common PPC payment structure. It entails a flat monthly management fee plus a percentage of your ad spend per month. So, you can expect to spend anywhere from 15 to 30 percent in an ad spend percentage plus the flat fee, which is typically $250 and up.

So if you spend $1,000 in ads per month, your bill may be $150–$300 in ad spend percentage fees, plus the flat management fee, plus your actual ad spend. The good news? Percentage based fee structures usually decrease as your ad spend increases, so you’ll spend less as time goes by.

This is a beneficial model for PPC management because it shows that your PPC agency will be hands-on. They will have the budget to manage and optimize your campaigns daily, do A/B testing, and swap out creative as needed. In short, you get what you pay for and you should get a lot of boutique service and insights with this PPC payment structure.

Percentage of Ad Spend

When agencies charge a PPC management fee based on a percentage of ad spend, it’s typically anywhere from 15 to 30 percent. So if you spend $1,000 in ads per month, you can expect to spend $150–$300 in management costs, or $1,150 to $1,300 total per month. Like we said above, this fee structure typically decreases as your ad spend increases. As you see results, you’ll be able to put more into your PPC program, get a lower cost per click (CPC), and pay less to your PPC agency.

If you’re asking why agencies would charge less to manage more PPC ad dollars, the reason is simple: it’s cheaper to run campaigns as they become more established because of historical data and reporting and ease of optimization. That being said, you’ll need to have a minimum ad spend to use this pricing model with PPC agencies. Usually, you have to come to table with at least $500 in ad spend per month to work with a PPC agency that charges only a percentage of ad spend. Otherwise, it’s not worth their time.

Performance-Based

A lot of clients like performance-based PPC management fees because you pay for results. It’s also incentivizing for agencies to do this since when you win, they win. However, agencies normally only charge this type of fee structure if your goals center around lead generation, sign-ups, and such.

Set PPC Management Fee

Every now and again, an agency will have a flat fee for everything. This payment model will be more of the set-it-and-forget-it type. You won’t have a ton of creative swapping or optimization. However, you will be able to control your spending and anticipate your PPC bill each month. Which brings us to our next point…

How Much Should You Spend on PPC?

Your PPC ad spend is entirely up to you and your digital marketing budget. However, the more you spend, the lower your percentage-based PPC management fee tends to be. Also, there is a barrier of entry to PPC. You need to have enough to invest in order to get the results you want. Any reputable PPC agency (like Witty Kitty) will be able to advise you on the appropriate spend. Then, you can decide if you’re ready to jump in.

How do I choose a PPC agency or manager? 

If you’re looking for someone to manage PPC for your business, you need to look for the following qualities and information.

Straight Up Honesty

Guarantees should be a red flag. There is no such thing as a sure thing or guaranteed result with PPC. Anyone who tells you otherwise is full of shit, to be frank. The whole point of PPC is to test, optimize, and get your ad spend over time while upping your conversions. A great PPC agency will be able to get you there, but they won’t sugarcoat the journey.

Expect your PPC program to take 3–6 months to really take off—especially if you’re starting from scratch. If your agency has the historical data and an existing account to work with, it may take less time for you to see your desired results.

Case Studies

You should always vet your PPC agency. Ask for stats or case studies about what they’ve been able to do for similar accounts.

Pricing

It’s always important to ask, “how much does PPC cost?” before you sign a contract. Some agencies (the ones you’ll be originally delighted about that are on the surprisingly inexpensive side), have a set-it-and-forget-it model. We like to call these PPC or advertising farms. While they will run your PPC accounts for less money than others, you’ll get less attention and service. Most often times, this is a waste of your money. On the flip side, you don’t need to go for the top shelf ad agency that has a top shelf price tag. Shop around to find a happy medium.

Deliverables

What do you actually get each month for your PPC ad spend and management fee? You must ask this question. You should get:

  • Daily check-ins and management of your ads
  • Weekly and/or monthly reporting
  • Creative optimization (if within your budget)

Size of Team

If you go with a large agency, you’ll always have someone to fall back on during employee vacations, sick days, or other unforseen incidents. If you go with an individual, you may have a lapse in service.

Who Owns the Account

You! You should ALWAYS own your own credentials to your AdWords accounts, analytics, and everything else. We have come to despise taking over accounts managed and owned by other agencies. It’s an unnecessary control tactic to keep your information in their hands. Responsible agencies will tell you to own your own landing page and website hosting and admin access. You should only have to grant permissions for your PPC team to access your analytics information, get into the backend of your website (if necessary for tracking and pixels), or accept their invitation to add you to their Google ad manager dashboard. That way, you’re always in charge and you always have the ability to kick people out of your account.

Communication

How quickly does your PPC agency of interest respond to emails, calls, or other forms of contact? They should within one business day. Otherwise, if you need something important, you’ll have to wait. You may miss out on valuable leads and conversions during this time.

Capabilities

Can your PPC agency produce creative for display ads as well as the strategic copy for text PPC ads? You may also need help with video. Make sure you ask what they can provide—and ask for examples from their portfolio!

Hopefully, by now you’ve learned a little more about your question, “how much does PPC cost?” If you have more questions get in touch! All the kittens at our 100% women-owned marketing agency would love to chat about your options.