eTail Optimisation Specialist at Click Funnel Ltd
28 July 2008 11:10am
We're a small search marketing company offering as part of our services PPC Account Management. At the present time we usually charge a setup fee and a monthly fixed price retainer for managing the account on our clients behalf. To me this is the most obvious charging methodology.
However the majority of agencies still seem to prefer charging on a commision basis with perhaps some bonus built in if they reach particular targets or campaign objectives.
I can see what benefit the agency has from charging this way i.e increased turnover etc. but i'm struggling to see what the benefit is to the client, if the more the agency spends the higher the commision they make. Surely this doesn't make financial sense in any respect.
I'd be interested to get some feedback from other agencies and end users on this.
Thanks in advance.
Technical Project Manager (MBA, MBCS, CITP, CEng) at Naxtech.com
28 July 2008 12:52pm
I do not think there is a right and wrong. It depends on what custmers who want to attract and what you think the best solution for them and you is.
Personally I am not a fan of a commision-based charge. A monthly cost seems more common-sense. You could however always base you costs around performance or various levels of it. ..or you could even adopt all three billing types and let your customer choose rather than you providing a fixed way of doing things. ...just food for thought.
Co-Founder at Beeby Clark + Meyler
29 July 2008 18:34pm
We use a similar structure. The set up fee protects us from a client that wants to use us to set up the account, structure it, etc. and then walk away taking the know how with them. We waive this for a client that signs a longer term deal.
As far as percentage of media, we go with a fixed fee based on range of spend and campaign complexity. Each client is different. Some clients have relatively easy campaigns to manage, while others have many different updates to make outside of normal PPC management (i.e. product updates, availability, offers, pricing).
I have seen a lot of companies use percentage basis because they essentially outsource it, putting their mark up on top of the fees they pay to 3rd parties.
E-Business Consultant at Dan Barker
30 July 2008 21:11pm
hi, Andrew, how are you?
'Commission' is a broad term (awful pun intended I'm afraid!). In one case it could benefit only the agency, in another it could benefit both. Here are 2 very basic examples:
Commission that only benefits the agency
I run a search agency. I manage to nab you as a client & we set up a deal where you pay me 10% of revenue for every client I bring you.
Commission that benefits both parties
I run a search agency. I set up a deal with you where you pay me 10% of any £1 net profit I bring you. On top of that, if I meet your acquisition target of <£30 per new acquired client, my percentage goes up from 10 to 15%.
Does that help illustrate it any clearer?
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