Yes, you heard it right +100% mark up on your CPM. Unfortunately, this is typical for media companies and agencies pushing programmatic advertising solutions. Hopefully, they are not stacking another percentage on top of it all and calling that the management fee. Unless you know for a fact you’re paying the cost, then there is plenty of room for negotiations. Agencies running targeted display campaigns out of Google Ads ensures you’re paying the cost.
Typically, Google AdWords bills the client’s credit card directly and the agency sends a separate invoice with the management fee. Unless, the agency bills the client in whole at the end of the month, there is no way to hide additional markups. This one is another trick in the book. When the management fee conversation comes up, the representative might say something like this, “we don’t charge a management fee, we simply add a fee onto the cost of the click. ” Next question, what is that fee?Here is where they get you, if your CPC is $1. 00 and they charge another $1.
00, then you have a 50% management fee. Another trick is to run your Google search campaign simultaneously on the Google Display Network GDN. If your average search marketing CPC is $3. 00 and the average GDN click is $. 50 probably closer to $.
05, then your media company could add $2. 50 to the GDN click to maintain the average search CPC of $3. 00. Unethical?Yes!However, I’ve seen this done many times. How to avoid this?Ask the representative if they will be running your campaign only on the search network. If they are not sure or say we include a small amount of GDN, then request they only run your campaign on the search network.
There is a fundamental difference between a search and display campaign push vs. pull marketing. The search customer is actively looking for your services and the other was at one time looking for your services. The conversion percentage is much higher for search customers. Most companies and agencies regardless of markups or other tricks charge a management fee. For search marketing, typical management fees run between 15% and 50%, usually depending on campaign budget.
Most media companies are in the middle around 25% to 35%. Agencies typically range from 15% to 30%. Many media companies push automated platforms to justify their higher management fees. Having played on both sides of the field, typically automated platforms under perform compared to campaigns ran directly out of AdWords, though I’m sure exceptions exist depending on who is running your campaign. Agencies and media companies running Google search campaigns are supposed to label their management fees on your invoice, but most of them do not.
Therefore, it’s important to reverse calculate off your monthly campaign spend to ensure your vendor isn’t stealing from you. I know many businesses are not aware of this unethical tactic, but I’ve caught a few media companies taking advantage of this situation on a monthly basis. It’s important when vetting a digital advertising agency or media company that you ask, “what do you do if you cannot spend my budget in a given month?” The right answer is, we do not charge you or Google does not charge you. An acceptable answer is we roll over your budget better keep an eye on it. However, we advise you to reconsider the agency or media company if they say, “we keep the leftovers.
” Honestly, hardly any business will ever ask and the media company will never bring it up. The answer will vary from company to company and agency to agency. From our experience, a competitive pay per click PPC management fee is between 15% 20%. We’ve personally never seen an automated platform convert higher than a skilled AdWords campaign manager. Thus, we recommend some skepticism if asked to pay a 35% or higher management fee for a fancy automated platform.
Display advertising is a little bit different. First, you need to verify you’re paying the cost. We’ve calculated the average CPM for all our display campaigns and cost was $0. 79 CPM and most of these campaigns are based on view able cost per thousand vCPM or cost per click CPC. Thus, be wary if your media company is pitching $5+ CPM display campaigns. If you’ve experienced something different or have a question about your current situation please reply below.