ADdictive Digital

How much do PPC agencies charge

PPC agencies usually charge a fixed retainer, a percentage of advertising spend, an hourly or project fee, or a performance-based fee. The useful comparison is the total cost for the work you need.

By Derick TurnerPublished 8 min read

Keep the costs separate
  1. Advertising budget
  2. Management fee
  3. Agreed extras

Conceptual guide · not campaign results

Keep the management fee, advertising budget and any extra work separate. This guide explains the models and gives you a practical way to compare proposals.

All worked figures are illustrative. They are not market averages or ADdictive Digital quotations.

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Finance

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Education

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PPC agency fee models at a glance

Fixed monthly retainer

An agreed fee for an agreed scope of ongoing work.

Check: what is included and what triggers an additional charge.

Read about retainers

Percentage of ad spend

The management fee changes with the advertising budget or spend.

Check: the calculation basis, minimum fee, tiers and any cap.

Read about percentage fees

Performance or hybrid fee

Some of the fee depends on agreed results, sometimes alongside a base fee.

Check: what counts as a result and how it is measured.

Read about performance fees

A charging model describes how the fee is calculated. It does not tell you whether the proposed work is good value.

Separate the management fee from the advertising budget

The media budget pays for advertising on platforms such as Google or Meta. The management fee pays the agency for its agreed work. A setup charge may cover the initial audit, account build or transition. Other services can sit outside all three.

For example, £10,000 in monthly media spend and a £1,500 management fee create a £11,500 ongoing monthly cost before VAT or additional work. If there is also a £1,000 setup charge, the first month becomes £12,500 on the same basis. Calling that a £1,500 campaign would give a fairly incomplete picture of what the business needs to fund.

Ask for those amounts to be separated in writing. Also establish who pays the advertising platform and which costs are recurring. Your finance team should not have to work out the structure from the first invoice.

Fixed monthly retainers

A retainer gives you an agreed fee for an agreed scope. It can work well when you want ongoing management and a predictable agency cost.

The important word is scope. Managing one established search account is a different job from rebuilding several accounts, producing creative and implementing CRM measurement. A retainer only gives you certainty when the responsibilities are reasonably clear.

Ask what happens when the work changes. Adding a new market or another advertising channel may require a revised fee. Equally, you should know whether a quieter period changes the service or whether the same work continues behind the scenes.

There is no need to turn every activity into a timesheet exercise. You do need enough detail to understand what you are buying and what would trigger an additional charge.

Percentage of advertising spend

With this model, the agency fee moves with the media budget. An illustrative 15% fee on £10,000 of spend would be £1,500. At £20,000 of spend, it would be £3,000.

That is easy to calculate, but spend and workload do not always move together. A larger budget may require more markets, creative and reporting. It may also be additional spend through an established structure with relatively little extra work. The fee needs to make sense in context.

Check for a minimum charge, tiered percentages or a cap. Ask whether the percentage applies to actual spend or the agreed budget, and what happens when spending pauses. Small differences in those terms can materially change the annual cost.

Hourly and project fees

Hourly work can suit a defined problem when you need specialist help alongside your own team. A project fee can work for a bounded audit, account build or tracking task.

With hourly work, agree how time is authorised and reported. With a project, agree the deliverables, access requirements, number of revisions and the point at which the work is complete. Neither model should leave you guessing whether implementation is included.

An audit that identifies problems is useful. It is still different from fixing those problems. If you need both, ask for both to be priced.

Performance fees and hybrid arrangements

A performance payment links some of the agency's income to an agreed outcome. That could be a qualified lead, a sale or another commercial result. It sounds straightforward until people disagree about what counts.

Before considering the price, settle the definition. If the fee is per qualified lead, which criteria must be met? If it is based on sales, how are cancellations, existing customers and delayed decisions handled? Which system is the source of truth, and when is a result mature enough to invoice?

A hybrid arrangement might combine a base retainer with a performance element. It can recognise that an account needs ongoing work even when sales take time to complete. Whether it is suitable depends on the data, the business economics and how much control each party has over the outcome.

Nobody should sign a performance arrangement while the measurement is still an argument waiting to happen.

What changes the amount of work

Account size matters, but advertising spend is only one part of it. The number of products, locations, languages and channels can all change the job. So can the condition of the tracking and the amount of creative testing required.

A business with reliable conversion data, an established website and someone supplying useful creative is different from one that needs all three built. Reporting requirements also matter. A monthly commercial review is a different commitment from preparing separate weekly packs for several teams.

Explain those requirements early. If the agency quotes against a smaller job than you actually need, one of you will eventually have an uncomfortable conversation.

What the management fee should explain

There is no universal package that every agency includes. A useful proposal should nevertheless make the following clear:

  • Accounts and setupWhich platforms and accounts are covered? Is setup or restructuring included?
  • Adverts and creativeWho writes, produces and approves the adverts?
  • TrackingWhat is included, and which technical changes need separate support?
  • Landing pagesDoes the scope cover recommendations, implementation or both?
  • ReportingWhat will you receive, and how will commercial outcomes be assessed?
  • Ownership and handoverWho owns the accounts, data and assets? What happens to access at the end?

Read the exclusions as carefully as the service list. A proposal can be perfectly reasonable while leaving work with your team. The problem is discovering that responsibility after the campaign has started.

See what our PPC management service involves

Tell us which parts of PPC management your team needs help with.

Compare the total cost over the same period

A lower monthly fee does not necessarily mean a lower total bill. Here is an illustrative three-month comparison.

Agency A

Management: £1,500 × 3 = £4,500

Setup: £1,000
Creative: included

£5,500

Three-month agency cost

Agency B

Management: £1,200 × 3 = £3,600

Setup: £2,000
Creative: £600 × 3 = £1,800

£7,400

Three-month agency cost

Illustrative figures, not quotations or market averages. Both totals exclude media spend and VAT.

That does not prove Agency A is better. Agency B may be producing considerably more creative or doing work Agency A has excluded. The example shows why comparing only the monthly management fee can lead you in the wrong direction.

Put both proposals against the same requirements and period. Include setup, required add-ons and any external support you will still need. Then assess the work, the evidence and the people doing it.

Ask how the work connects to your customers

An agency can complete every task in a proposal while the business remains disappointed. You therefore need a discussion about what success means as well as a list of activities.

For lead generation, ask how the agency will learn which enquiries become suitable customers. If your CRM records those outcomes, establish how they will be used in reporting and decisions. If the data is missing, identify the work needed to improve it before relying on a return-on-investment forecast.

A cheap lead can be expensive once your team has spent time chasing it. An apparently expensive lead can be good value when it reliably becomes profitable business. Your fee comparison should sit alongside that commercial picture.

Check the terms before negotiating the price

Confirm the minimum term, notice period, payment schedule and what happens during a pause or handover. Establish the treatment of VAT and third-party costs rather than assuming the headline figure covers them.

If the proposed fee is more than you can justify, discuss priorities. There may be a smaller, useful scope that the agency can deliver properly. Asking for the same work at a lower price without changing anything else can simply move the pressure into delivery.

Read what to ask a PPC agency before signing

Questions about PPC management costs

Is Google Ads management included in the ad spend

Treat them as separate costs unless the proposal explicitly states otherwise. Ask for the media budget and agency fee to be itemised, including any setup charge and required extras.

Is a percentage fee better than a retainer

Neither is automatically better. Compare the fee at your likely spend levels, the scope and the rules for changing the arrangement. Predictable costs are useful, but so is a structure that remains sensible as the work changes.

Should I choose the cheapest PPC agency

Choose the agency whose scope, competence and way of working fit the business at a sustainable cost. A low fee is not proof of poor work, and an expensive proposal is not proof of expertise. Ask for relevant evidence and a clear explanation of who will do the work.

How does ADdictive Digital price the work

We discuss the accounts, objectives and support required before proposing a scope and fee. Media spend is considered separately from agency work. That conversation should also identify creative, tracking or website requirements that need their own budget.

Need help applying this to your campaigns?

Book a 30-minute discovery call to discuss your campaigns, the problem you want to solve and whether ADdictive can help.

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Prefer email? info@addictivedigital.co.uk

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