How do you know if your PPC agency is underperforming?

It is easy to assume a PPC agency is underperforming when cost per lead goes up. Sometimes it is. But PPC performance moves for all sorts of reasons that have very little to do with the person managing the account. Competition changes. Search demand falls. CPCs increase. Seasonality hits. Your website changes. Your offer becomes less competitive. Lead-to-sale rates deteriorate. This article covers the warning signs we look for when we review someone else's PPC management.

A good agency cannot control all of that.

What it should be able to do is identify what is happening, explain why it is happening and show you what it is doing about it.

That is a much better test of whether your agency is underperforming.

What PPC underperformance actually looks like

The most obvious definition would be this.

You are spending more and getting less back.

That matters, but it is incomplete. An agency can hit its target cost per lead and still be doing a poor job.

For example, you spend £10,000 and receive 200 leads at £50 each. On paper, performance looks strong. But only 30% of those leads answer the phone and 5% become customers.

Another campaign generates leads at £80, but 70% answer and 20% become customers. The £80 leads are considerably more valuable.

If the agency is optimising entirely around the £50 headline CPL, it may actually be moving your account in the wrong direction.

This is why PPC performance should be measured as far down the sales funnel as your data allows.

The closer you get to revenue, the harder it becomes for weak management to hide behind attractive advertising metrics.

A PPC agency's job is not to make Google Ads look good. It is to make the money you spend on Google Ads work harder.

Your costs keep increasing without explanation

Rising costs are not automatically evidence of poor management. Sometimes the market simply becomes more expensive.

If the average CPC in your sector rises 25%, an agency cannot magically buy the same traffic for last year's prices. What matters is whether they can explain the movement.

A good PPC manager should be able to tell you whether rising acquisition costs are being driven by things such as:

• Higher CPCs
• Lower search demand
• Reduced conversion rates
• Increased competition
• Changes in impression share
• Poorer landing page performance
• A shift in keyword mix
• Changes to bidding
• Budget limitations
• Changes in lead quality

What you should not accept is a shrug.

"Google has been expensive this month." That tells you almost nothing.

Ask better questions.

• If CPCs increased, which campaigns or keywords drove it?
• If conversion rate fell, was the problem traffic quality or the website?
• If competition increased, which competitors entered or became more aggressive?
• If performance deteriorated following an account change, what was changed?

Your agency does not need to have an immediate solution to every problem. It should have a diagnosis.

Lead volume looks good but lead quality is poor

This is one of the biggest problems in lead generation PPC.

Advertising platforms optimise around the signals you give them. If your agency tells Google that every submitted form is equally valuable, Google will try to generate more submitted forms.

It does not automatically know whether the person:

• Answers the phone
• Has enough money
• Lives in the right area
• Meets your qualification criteria
• Wants the service you actually provide
• Becomes a customer

This creates a dangerous situation. The agency can show you improving numbers while your sales team tells you performance is getting worse.

For example:

• January: 100 leads at £60 CPL.
• February: 130 leads at £50 CPL.
• March: 160 leads at £42 CPL.

Looks excellent. But suppose sales fall from 15 to 9.

Your advertising has not improved. The campaign has simply become better at generating something Google calls a conversion.

A good agency should therefore care about what happens after the lead arrives. That can mean connecting CRM data, importing offline conversions, reviewing call recordings, categorising lead quality or simply speaking regularly with the sales team.

Google supports this directly. Its documentation on qualified leads and converted leads covers importing the later stages of your funnel back into the account, so bidding can optimise towards the leads that actually turn into business.

If your agency never asks whether the leads are any good, that is a serious warning sign.

Reporting tells you what happened, not why

Most PPC agencies can produce a report. Google Ads will practically produce one for them. That does not mean the reporting is useful.

A poor monthly report often reads like this. Impressions increased 14%. Clicks increased 8%. CTR increased from 4.2% to 4.6%. Conversions decreased 6%. CPC increased 11%.

Those numbers may all be correct. But you could have found them yourself.

Useful reporting should explain:

1. What happened
2. Why it happened
3. Whether it matters
4. What is being done next

A good report might instead say something closer to this.

Cost per lead increased 18% this month. CPC remained broadly stable, so the movement has primarily come from the landing page conversion rate falling from 8.1% to 6.7%. Mobile conversion rate was responsible for most of the decline. We have identified two recent landing page changes that coincide with the drop and recommend reverting them before changing campaign bidding.

That is useful. It gives you a diagnosis and an action.

Reporting warning signs

Good agencies should tell you when something went wrong. In fact, those are often the most valuable conversations you will have with them.

The account is barely being changed

This one needs some nuance. More changes do not automatically mean better management.

Constantly changing bids, budgets, targeting and campaign settings can actually damage performance by preventing automated bidding systems from stabilising. So you should not expect hundreds of account changes every week.

But you should expect evidence of ongoing management. Over time there should be activity around things such as:

• Search term reviews
• Negative keywords
• Budget allocation
• Bid strategy
• Ad copy
• Creative
• Keyword coverage
• Audience signals
• Landing pages
• Conversion tracking
• Campaign structure
• Location targeting
• Device performance
• Performance Max reporting
• Testing

If you inspect your account's change history and almost nothing meaningful has happened for three months, you should ask why.

There may be a perfectly good explanation. But "the campaigns are running fine" should not become an excuse for putting the account on autopilot.

Tracking is making performance look better than it is

One of the easiest ways for a PPC account to appear successful is bad conversion tracking. Sometimes this is deliberate. More often, it is simply poorly configured.

Imagine your campaign reports 140 conversions. You investigate and discover those conversions contain:

• 55 genuine lead forms
• 30 phone calls
• 20 WhatsApp clicks
• 18 email clicks
• 12 form starts
• 5 visits to the contact page

The report says 140 conversions. You probably received nowhere near 140 enquiries.

This becomes particularly problematic with automated bidding, because Google may be actively optimising towards those weaker actions. Google's own documentation on primary and secondary conversion actions sets out which actions feed bidding and which are observation only, and it is worth understanding before you accept any headline CPA.

Your agency should be able to answer all of these without hesitating.

• Which conversion actions are primary?
• Which are secondary?
• Which conversions are included in bidding?
• How are calls measured?
• Are duplicate conversions possible?
• Are offline sales or qualified leads imported?

If nobody can answer those questions, you cannot trust the headline CPA.

The first thing I check when a Google Ads account looks suspiciously good is the conversion tracking.

Branded traffic is masking acquisition performance

This is one of the quieter ways an account can flatter itself.

Someone hears about your business from a recommendation. They search your company name. They click a paid advert. They convert. Google Ads records the sale.

Technically, that is correct. But the advertising probably did very little to create the customer.

Brand campaigns often generate extremely cheap conversions because the person already knows who they are looking for. There is nothing inherently wrong with bidding on your own brand. The problem comes when branded and non-branded acquisition performance are blended together.

Imagine:

• Brand campaign: 100 leads at £10.
• Non-brand campaigns: 100 leads at £90.

The combined account CPL is £50.

That looks considerably better than saying your cost to acquire demand from people who were not already searching for you is £90.

Your agency should understand the difference between capturing existing demand and generating incremental customers. Ask for branded and non-branded performance separately.

Budget is going to the wrong places

A PPC account can perform reasonably well overall while hiding huge differences underneath.

Suppose you spend £20,000 across four campaigns.

The account average might still look acceptable. But why is Campaign C receiving 40% of the budget?

Sometimes there is a good reason. Perhaps it generates larger customers. Perhaps volume cannot be increased elsewhere. Perhaps the campaign has an important strategic role. But someone should be asking the question.

Budget allocation is one of the most important parts of PPC management. Your agency should not simply optimise individual campaigns. It should continuously ask one thing.

Where should the next £1 of advertising budget go?

That is a much more commercially useful question. We have set out what disciplined allocation looks like at scale in what a £50k per month paid media account should actually look like.

Your agency has stopped testing

PPC accounts rarely improve forever through bid adjustments alone. Eventually you need new ideas.

That means testing things like:

• New offers
• New landing pages
• New messaging
• New keywords
• Different campaign types
• New creative
• Qualification questions
• Audience strategies
• Geographic expansion
• New bidding approaches

Not every test will work. In fact, plenty should fail.

If every experiment your agency reports is supposedly successful, I would be sceptical. Testing means accepting that some ideas will lose. The important thing is that the agency learns from them.

The bigger warning sign is an account where the same ads, same landing page and same strategy have been running for a year because performance is "good enough".

Good enough eventually becomes worse.

The agency does not understand your business

This is probably the least technical warning sign and one of the most important.

Your PPC agency should understand how you make money. Not at the level of "you sell mortgages". At the level of these questions.

• Which products have the highest margins?
• Which customers are most valuable?
• Which enquiries are usually rubbish?
• What percentage of leads answer, qualify and sell?
• What objections do customers have?
• What makes you different from competitors?
• Where is operational capacity limited?
• What happens after someone submits a form?

Without that information, PPC management becomes a technical exercise. The agency optimises campaigns. What you actually need is someone optimising customer acquisition.

That difference becomes increasingly important as Google and Meta automate more of the technical work. Knowing which button to press inside Google Ads is becoming less valuable.

Knowing what you should be asking Google Ads to achieve is becoming more valuable.

How to tell if you actually need a new agency

Do not fire an agency because of one bad month. Advertising performance fluctuates. Even very good PPC managers will occasionally have campaigns move against them.

Instead, look for patterns. I would become concerned if several of these were happening at the same time:

• Performance has deteriorated for several months.
• The agency cannot clearly explain why.
• Lead quality is poor and nobody is investigating it.
• Reporting focuses on vanity metrics.
• Tracking has obvious problems.
• Very little meaningful account activity is taking place.
• The same strategy continues despite declining results.
• Brand conversions are disguising acquisition costs.
• There is little or no testing.
• The agency rarely asks about sales performance.
• Recommendations are reactive rather than proactive.
• You no longer understand what the agency is doing.

Before leaving, ask the agency directly. Something as simple as this works well.

"I am concerned performance has stagnated. What do you think the biggest three problems in the account are, and what would you change over the next 90 days?"

The answer will tell you a lot. A strong agency should have a view. They may disagree with your assessment, and they may have good reasons for doing so. That is fine. What you do not want is vagueness.

If the conclusion is that you need to move, it is worth understanding the market before you start looking. We cover fee models and typical bands in how much do PPC agencies charge.

What good PPC management should look like

A good agency relationship should give you clarity. You should broadly know:

• Where the money is going
• Which campaigns are working
• Which campaigns are struggling
• Whether lead quality is improving or deteriorating
• What is currently being tested
• What happened when previous tests were run
• What the agency thinks should happen next

You should also feel comfortable challenging the numbers.

Good PPC management is not about producing a green dashboard every month. It is about making better decisions with your advertising budget. Sometimes that means increasing spend. Sometimes it means cutting spend. Sometimes it means rebuilding a campaign.

Sometimes the best recommendation an agency can give you is that the problem is not PPC at all. Perhaps your landing page needs rebuilding. Perhaps your pricing is uncompetitive. Perhaps your sales team is not following leads up quickly enough.

That last one is worth taking seriously. Long-standing research published in Harvard Business Review found that firms contacting an online enquiry within an hour were nearly seven times more likely to qualify the lead than those that waited longer. No amount of campaign optimisation compensates for a lead sitting in an inbox overnight.

The important thing is that somebody is looking at the whole commercial picture rather than protecting the appearance of the advertising account. That is the job we take on as a PPC consultant as much as an account manager.

Conclusion

The clearest sign that a PPC agency is underperforming is not necessarily a high cost per lead. It is a lack of understanding about why performance looks the way it does.

Costs will rise sometimes. Campaigns will fail. Tests will lose. Markets will change.

A good agency should be able to identify those problems, communicate them clearly and build a sensible plan around them.

So look beyond the dashboard:

• Look at lead quality
• Check conversion tracking
• Separate branded demand
• Inspect where the budget is going
• Ask what has actually been tested

Then compare what Google Ads says happened with what happened inside your business.

That is where genuine PPC performance becomes much easier to judge.

Not sure whether your PPC agency is getting enough from your budget?

We can independently audit your PPC account, conversion tracking and campaign structure to show you what is working, where money is being wasted and what we would do differently. There is no obligation to change agencies. Sometimes the best outcome of an audit is confirmation that your current agency is doing a good job.

Book a free PPC account audit See our PPC management services

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