“You have to spend money to make money.”
While the phrase may be cliché, it holds weight in the pay-per-click (PPC) advertising world. When campaigns are well-managed, the returns can be significant. According to Google's 2024 Economic Impact Report, businesses earn an average of $8 in profit for every $1 spent on Google Ads.
CallRail empowers businesses to connect their PPC ad spend directly to customer calls, form submissions, and conversions. With robust call tracking and attribution tools, you can pinpoint which campaigns and keywords are driving real results. This level of transparency helps you hold your PPC agency accountable and ensures every dollar spent is tied to measurable outcomes.
But simply spending on ads isn’t enough. To know if your PPC agency is truly delivering value, you need visibility into how your budget is being used, and what it’s actually producing. And, of course, you’ve got to be able to track those leads and sales.
So if your business is working with a marketing agency to manage your PPC campaigns, just how much should you be paying? We jumped on the phone with our friends at New Orleans-based Search Influence to get their perspective on the topic.
Looking for a PPC agency to work with? Here’s a directory of CallRail’s Agency Partners.
Search Influence has been helping businesses succeed online since 2006. The team at Search Influence makes marketing accountable for businesses across a wide range of industries and sizes. Tracking and accountability have always been central to Search Influence’s work with clients.
Before we dive into the typical costs of PPC management, let’s first understand how to track performance and ROI with clarity and confidence.
Common PPC agency pricing models
Before we answer the “how much” question, it’s important to be familiar with the different pricing models that PPC management agencies use for billing.
Here’s a brief overview of the three most common PPC pricing models:
1. Percentage of ad spend pricing
In this model, digital marketing agencies charge a fee based on a fixed percentage of your total monthly advertising spend, typically ranging from 10% to 20%. For example, if your business allocates $10,000 per month to platforms like Google Ads, Meta Ads, or programmatic channels, the agency's fee would fall between $1,000 and $2,000.
This pricing structure is particularly common among agencies managing performance-driven campaigns, as it directly ties their compensation to the scale of your ad budget. The logic is straightforward: as your ad spend increases to capture more leads or conversions, the agency earns more, creating a natural incentive to optimize your campaigns and drive results.
Why Agencies Prefer This Model
Efficient for Clients: Businesses can easily forecast costs and assess ROI since the management fee scales proportionally with the campaign size.
Aligned Incentives: The more successful your campaigns are (and the more you’re willing to spend), the more the agency benefits, encouraging them to improve performance metrics like click-through rates (CTR), cost per lead (CPL), and return on ad spend (ROAS).
Scalable Revenue: Agencies gain predictable, scalable revenue as client budgets grow, allowing them to invest in better tools, talent, and services.
Efficient for Clients: Businesses can easily forecast costs and assess ROI since the management fee scales proportionally with the campaign size.
However, it's important to note that transparency is key in this model. Clients should ensure that agencies are tracking conversions accurately by using tools like CallRail’s call tracking and attribution software to verify that increased ad spend is translating into real leads or sales, not just clicks.
Pros:
Aligns agency incentives with campaign performance.
Easy to budget and scale.
Cons:
May become costly as ad spend increases.
2. Management fee + percentage of ad spend pricing
Many mature marketing agencies will charge a management fee to cover overheads related to the PPC ad campaigns they’re managing for clients. Like the first example, this pricing model also uses the percentage of ad spend as its baseline, just with an additional fee.
This model is going to be less prevalent among legacy media companies and commodity PPC houses. More complex campaigns are seldom static, because even small businesses have to consider seasonal marketing and promotion needs.
Good for: Customers who want transparency and ultimate ownership of their accounts. When you’re paying a management fee in addition to percentage of spend, it’s harder for the agency to justify holding accounts as “proprietary.” This model also ensures there is a budget available for A/B testing, as well as advanced conversion tracking both online and by phone, text, etc.
Not great for: Very low-cost accounts. Very small businesses are best served with automated platforms for which a pure percentage of spend makes sense.
3. Flat fee pricing
Some agencies will charge a flat, pre-determined fee after settling on a scope of work and calculating the static costs related to managing the client’s PPC campaigns. Some businesses prefer the straightforward nature of this model, so long as the activities and services included in the scope are clearly defined.
This is most often a simplification of the management fee plus percentage model, where the value that would accrue per the percent of spend is factored into the flat fee.
Good for: Relatively static campaigns and clients who want fixed expenses each month.
Not great for: Dynamic campaigns. Many businesses are seasonal and/or use specials to drive business. In these cases, both the management burden and the ad-spend will need to be more flexible.
4. Performance-based pricing
In addition to the three PPC pricing models mentioned above, on occasion, you may see a “performance-based pricing model.”
Under this model, most businesses are paying for lower-funnel actions –– think inbound calls, emails, form conversions, trial signups, demo requests, and the like. Some agencies also set up a commission rate with this model and collect a small percentage of revenue from closed sales, if they can claim responsibility for lead origination. This is most commonly seen in e-commerce and referral-based business models, and is also known as a “CTA pricing model.”
Check out our webinar: How the Pros Track Google Ads ROI
A look at today’s PPC rates
Using the framework of the pricing models above, let’s take a look at the costs associated with each. The rates shared below represent middle-of-the-road pricing in the PPC world.
Percentage of ad spend: 15-30%
While it isn’t incredibly common for agencies to charge rates as low as 15 percent of total ad spend, big media conglomerates can offer such terms to promising accounts by utilizing kickbacks, or performance incentives. Most agencies charge upward of 20 percent to manage PPC campaigns.
When considering a proposal that uses this pricing model, the main thing you’re going to want to ask is what’s included: Will the agency be updating ad copy? Building landing pages? Rotating ads?
Some agencies roll these PPC service offerings into a buffet model, while others are more a la carte or pay-as-you-go, where each activity is itemized as its own line on a monthly invoice.
Another variation of the percentage of ad spend PPC pricing model includes a setup fee, which you’ll find to be pretty common. Agencies charge this fee to cover important activities like landing page implementation, lead tracking with forms, calls and creative for display and native advertising.
Search Influence adds some color to the additional costs in their post, “Why Do Digital Agencies Have Setup Fees for Online Ads?”
Percentage of ad spend + management fee: 15-30%, $500-$5,000/ month
Monthly management fees are flat and fixed and may be assessed in association with activities like ad copy updates, ad rotation, and landing page creation. Depending on the workload related to managing a particular company’s PPC campaigns, a management fee can span a pretty wide range: Typically no less than $500 a month, and up to $5,000 a month or more.
How much should you be spending on PPC? Use our PPC budget calculator to get a better idea.
How much should you pay an agency for PPC services?
The answer to this requires you to answer a separate question: How hands-on do you want to be with your PPC management?
In Search Influence’s experience, the typical small-to-mid-sized business decision-maker simply wants to see a lift in inbound leads from activities like PPC — you might be able to relate. A lot of times, the details are tiresome and pull you out of your sweet spot.
If that’s the case, a pricing model based on the percentage of ad spend probably makes the most sense. But if you’re looking to tinker and get hands-on with your PPC ad spend, you’ll need to look for agencies that itemize their services so you can carefully manage your budget.
Most of all — as a buyer of marketing services, whether organic or paid — it’s critical for you and your agency to clearly discuss and agree upon goals and timelines before you get started.
To quote Alice and the Cheshire Cat:
“Would you tell me, please, which way I ought to go from here?” Alice asked.
“That depends a good deal on where you want to get to,” said the Cat.
Step one is always about getting clear on that very thing: Where do you want to go?
