Whether you’re just starting to consider driving traffic using pay-per-click or you’ve been involved in PPC for several years but still want to save money, taking a closer look at the payment models available can help you decide which works best for your specific needs.
Every payment model has its own pros and cons, and knowing the differences can help you figure out how to plan your budget and plan your success accordingly.
Let’s take a closer look at the different options available to help you make a more informed decision about your advertising.
The Hands-Free Option
Google makes it temptingly simple for beginners to take advantage of its pay-per-click services using Adwords Express. Adwords Express touts that you’ll be able to “see your ads in just 15 minutes or less,” even though this applies to all Adwords accounts, not just Express.
So what does Express do differently? It lets you create your ads, set a budget, and let it go—all completely hands free.
Adwords Express does have its uses.
If you don’t have a website and simply have a retail storefront, and you’re okay with that, then Express is a viable option. It provides a way for potential customers to call you directly or to get directions to your place of business through the ad itself.
The problem, as you might expect, is that there’s no keyword targeting, no precision, and no method to the madness. It may be fast and simple to set up, but it can also drain your budget and deliver poor quality traffic.
The verdict: AdWords Express can work if you’re looking for the easiest way to set up Google ads and don’t have time to manage the campaign, but it’s not a good option if you want to stretch your budget and get the most out of what AdWords has to offer.
Managing Your PPC In-House
In-house PPC management sounds pretty straightforward: you simply hire someone (or a group), allocate a specific budget, and then let them do their magic. An in-house PPC manager (or team) can be held accountable for performance and has a solid understanding of your business and your markets, in a way that perhaps an outsourced company would not.
Of course, you may save money and will be able to track your employees’ progress more efficiently, but there are also downsides.
First, it can be tricky to properly evaluate someone’s skill in pay per click management—particularly if you’re managing a large account with multiple campaigns, ad groups, and keywords. Being Adwords Certified as a Google Partner is a great place to start, but it doesn’t mean someone is qualified to manage large campaigns or is even great at PPC campaign management.
You also don’t know how long your PPC manager will stick around. Even if you end up finding someone who’s great for the job, there’s nothing stopping them from moving on to greener (and more lucrative) pastures when a better offer comes along, leaving your account to flounder.
And one thing’s for certain—you can’t afford to let your account stagnate. Not only will clicks and costs continue to grow, but your competitors will never stop their efforts to outbid/outrank you while you’re scrambling to manage yours.
The verdict: In-house PPC management is a great way to get the most control over your campaigns, but it requires being able to hire and pay for talented search marketers that will deliver the results you need.
Outsourcing Your PPC
Outsourcing has a number of benefits, but also a number of potential pitfalls to watch out for. What’s more, there are multiple types of PPC management that can be outsourced. For example:
The Spend-as-You-Grow Model
This option makes sense for a lot of businesses, and it’s easy to see why. As your business grows and you gain more targeted traffic, your campaigns will inevitably grow. And when that happens, the company you’re outsourcing to will need to allocate more of their time, people and resources to manage your account, so the price goes up.
There are a lot of reasons to consider this type of model—mainly because it won’t break your budget but will still give you the return on investment you crave. Of course, this model also works only when you are seeing a return on the money you invest in AdWords.
If you’re targeting a ton of keywords, crafting a bunch of ads, but still seeing little reward for your efforts, it’s time to look deeper into the root cause. Unscrupulous pay-per-click management companies will use this model to target “junk” keywords or otherwise bloat your account with low quality traffic in order to justify raising their fees. Be diligent about checking your analytics and seeing where your traffic is really coming from, and why it may not be converting. You can also sign up for a free iSpy alert to monitor your own site so you can keep track of whether or not your PPC management company is adding keywords, testing ad copy, etc.
Of course, if that’s the problem you’re facing, the issue goes much deeper than just the company that’s managing your PPC accounts. You’re going to need to look at the issue from multiple angles, such as: Are you targeting the right keywords? Is your offer reaching the right audience? Does your call-to-action make sense and offer real value? Those are the additional questions you’ll need to ask if you find out your PPC management company is doing a sloppy job managing your account.
The verdict: A spend-as-you-grow model can work well if you have a smaller budget and will be able to pay more as your budget grows, so long as you can trust your agency not to take advantage of the arrangement by maxing out spending so their bottom line grows more than yours.
The Pay-for-Performance Model
Pay for performance makes great sense on the surface.
You pay only when the PPC management company reaches a pre-defined objective or goal. This forces them to truly know what types of actions get clicks and conversions, since they don’t get paid if they don’t deliver. For you as a business owner, this also means you greatly lower your risk in paying a company while having little results to show for it.
Here again, however, you may run into shady dealings with companies who start out incredibly enthusiastic and focused on your campaigns, but gradually lose the motivation to do well when their efforts don’t reach your milestones. Some PPC practitioners following this model have gotten unusually desperate and overly inflate numbers (again, by driving low quality traffic) just to meet a specific deadline or goal.
The verdict: The pay-for-performance model can work well for some businesses but can possibly backfire if PPC managers don’t meet the goals and lose interest in closely managing your campaign.
The Fixed-Fee Model
This type of payment model is also attractive to businesses and PPC managers alike. Since you’re paying a flat fee, you don’t have to worry about unexpected costs that grow as your account gets larger or you broaden your keyword reach. The PPC management agency is happy since they get paid regardless, and it’s in their best interests to maximize the performance of your ads while keeping your costs low in order to keep you as a client.
Another benefit is that real downsides to this method are few and far between. The only type of business which may not perform as well under a fixed-fee management agreement are those types of businesses who do the bulk of their sales on a rotating or seasonal basis. If your big markets are targeting back-to-school crowds, holiday shoppers, or summertime vacation-goers, you may not ultimately make enough to struggle through the downtime or justify the costs of a PPC management company in the off-season.
The verdict: The fixed-fee model is great for businesses and agencies alike. You end up paying a fixed amount you know fits your budget, and PPC companies are incentived to manage your campaign well so you’ll continue using their service.
Choosing the Right PPC Management and Payment Model for Your Business
As you can see, there are a variety of PPC payment models, each with its own set of criteria to help you determine which is the right “fit” for your business. As with any type of investment, make sure you run the numbers and accurately gauge the ratio of your PPC spending to the management company’s fees.
Even if they’re working on a flat fee, what you may consider as a good month in terms of revenue may ultimately cost you 30%, 40%, or more of your budget on PPC management fees alone. In addition, many PPC companies use third party optimization tools and monitors to accurately track and adjust bids accordingly. These programs often carry a monthly fee for which a portion may also be billed to you. Make sure to ask about these extra fees and costs up front before you sign the dotted line.
No matter which model you ultimately choose, you’ll need to consider your specific market, the existing competition, the seasonality or levels of interest in your product, your pricing strategy, profit margins, and any other factors that apply to your specific business or industry. Don’t be afraid to ask the PPC management company for references and testimonials to make sure they’re a good fit, and the last thing you want to do is underpay for time expended or overpay for the performance delivered.
The Bottom Line on PPC Management
Pay per click and SEO in general can be a complex, ever-evolving game in which one has to delicately balance their spending with the revenue they earn from clicks and conversions. Whether you ultimately hire someone (or a team) in-house or choose to outsource it to a knowledgeable agency shows that you’re ready to get serious about getting real results from this type of marketing strategy.
But choosing or hiring a PPC management team or hiring an agency is not something to rush into. It’s a decision that could affect the long-term performance and profitability of your company online. No matter what, having transparency, accountability, and collaboration between parties is the ultimate trifecta to aim for. Managing checks and balances is crucial to proper reporting, and even doing a quarterly audit could be a good idea to ensure that you’re on the right track. Truly professional companies and experienced employees understand the importance of this type of work, and won’t shy away from keeping you “in the loop” on your ads performance.
What type of PPC management payment model are you currently using? How is it working out for you? Still confused about which one to choose? Post your thoughts in the comments below and share your perspective with us. We’d love to hear form you!
Gary Victory is the go to business analyst at Elite Group Marketing. He works with both startups and multi-national brands focused on business marketing strategies and technology. He is a contributing writer to KISSmetrics, Crazy Egg, Social Media Examiner, Elite Group Marketing Blog, and others. Follow him on Twitter @GaryVictoryLDN.