Pay Per Click Campaigns - Let the buyer be wary

Pay Per Click Campaigns - Let the buyer be wary

Part II of SEM Setup Kit.

Pay-Per-Click (PPC) Advertising is the most expensive tool in the Search Engine Marketing arsenal (SEM).  It can be very helpful under the right circumstances, though it's not cost-effective in many situations.  This article will briefly make a case for professional management of  PPC campaigns.  We'll also show you how much (and how) professional firms charge for PPC management services. 
Basically, we're recommending you use a professional, and warning you to be careful who you choose.


Why should you Consider Using a Professional for PPC?

A professional can get better results with $250, than an amateur can get with $1,000.

A poorly run PPC campaign is tragically expensive with almost no benefits.  The biggest mistakes are made at the beginning of the campaign while your team is figuring out what search phrases, time frame, and spend volume is best.  A PPC expert will be more adept at reacting to feedback from the campaign; and an industry expert will be even better at getting things off to a good start.  The stakes are high, so the benefits of using a professional almost always exceed the cost.  Be careful though - There are 'predators' in the PPC market, and management fees are often hidden.


How Much do Professional Firms Charge for PPC Campaigns?

There are several different pricing models for PPC -  Some are expensive, some are reasonable, and some should be avoided at all costs!
You don't always get what you pay for, and you don't often know how much your paying!  To illustrate these points, let's look at 3 different ways firms charge for PPC services:


Bundled:  Some firms charge a monthly fee that includes Local Search,  PPC., Organic SEO, etc..  Management fees are usually un-categorized and often un-disclosed -  The client doesn't know how much they are paying Google or paying in management fees.  The actual fee often exceeds 50% of the PPC spend.  IE: with a $1,000 monthly campaign, you could be paying $250 for Local Search, $350 for PPC ad purchases, and $400 in PPC management fees.
Bundles are often sold by firms with a great sales team.  PPC Management fees can be as high as 60%.

Per Click or a Percentage of PPC cost:   Per-click costs are often separately disclosed, but they can also be hidden:  If your firm is using a proprietary reporting tool, as many firms do, they can easily hide the extra costs in the reported per-click rates.  IE:  The per-click rates look straightforward, but a fee can be added before the charge is disclosed on the report. 
Hidden fees could also be charged in addition to other disclosed fees - You might think you're paying a fixed fee, or getting the service free of charge, but a per-click charge could be hidden and high!

Fixed Fee:  This is a pretty straight-forward arrangement.  You pay a monthly fee for the service, and the firm manages whatever amount you choose to fund.

Many reputable firms charge a fixed fee with a small percentage for campaigns above a certain threshold - like $1,000 per month.  This second tiered charge is appropriate for a couple reasons: 
1.  Significantly larger campaigns carry a greater level of responsibility, and;
2.  larger amounts carry additional operating costs, like insurance, processing fees, VAT (for some states), etc..  Granted, these incremental expenses are small, but they do exist and they should be addressed.


I hope you found this information helpful.  As former CFO of a National SEM firm, and as Controller of Heartbeat International, it is my pleasure to provide this information to help you make wise choices with your SEM dollars. 

As I close this blog, here are some parting suggestions:
If you're managing your own Pay-Per-Click campaign, Stop It!
If you think your IT firm is running your campaign free of charge, think again.
If your firm doesn't clearly disclose their PPC management fees, run!
If you have any questions, please reply to this blog, or contact Extend Web Services at your convenience.

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