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Is a PPC Service Really Worth 20%? The Math Doesn't Add Up.

I really don't know who I'm going to offend on this one. We've been researching so many vendors over the last couple of months that work with chat, lead-gen widgets, and website platforms themselves that we haven't taken the time to explore PPC vendors. Maybe that's why I was blindsided to find out that there are at least two vendors out there charging 20% and one that we found who is charging 25%.

Is it me or is this insane? We'll put aside the 25% vendor for now. I'm hopeful that it's some sort of accounting mistake or something. Focusing on the 20% charge, it really bugs me that this may be more common than I ever knew. I've always hung around the organic side of search, so PPC hasn't been a focus. With that said, I've managed dozens of PPC campaigns over the years and I could never imagine charging anything other than a flat fee.

To me (and again, I might be on the wrong side of this argument and would be very open to some education on this one), if a dealership is spending $10,000 per month on their PPC, $2,000 of it going to management seems high. If the software is driving the bidding and the feeds are generating the dynamic ads, wouldn't it seem that very little manual effort and development costs are going into the service on a monthly basis?

I've always been a fan of flat fee PPC management because of transparency. I want to be able to recommend to a dealer that they raise their budget without them wondering if I'm just trying to make more money and I want to be able to recommend that they reduce their budget without reducing my service fee. To me, adjusting a budget is a matter of changing a number or two in the backend and I cannot justify charging hundreds of dollars more per month for clicking a few buttons.

Here's the math:

  • 20% service fee
  • $10,000 per month initial budget
  • Dealer wants to raise to a $12,000 per month budget
  • Vendor clicks a few buttons, adjust some daily budgets
  • Additional monthly cost for clicking those buttons: $400/month
  • Yes, that's $4,800 a year for 5-10 minutes of effort

I'll say it again. I'm willing to hear why I'm wrong. I'd love to see the additional monthly effort that goes into a bigger budget. If that's not the case, I'm open to hearing why the cost is justified. If there are vendors out there charging a lower percentage or a flat fee that dealers (or vendors) are willing to recommend, I'd love to hear about those as well.

Someone, please set me straight on this issue. It's bugging me.

Views: 190

Tags: PPC, Pay Per Click, Search, Search Advertising, Search Marketing

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Comment by Dara Moore on May 12, 2014 at 9:27am

20% management fee is a bit high, especially for what most vendors offer. We use DealerFire for our PPC. The fee they charge us is inline with what they offer. But I am the first to admit our process is not the norm in our industry. I write at least 90% of our ad copy, set the landing pages for ads, determine the GEO area for ad groups, analyze the campaigns performance and make revisions based on the goals of each of my stores (right now we have 6 of our 8 stores running ppc). Dealerfire handles the setup, the budgets, and implementing my instructions for each store. The way we run our PPC is far from automated. Both the vendor and I are in the accounts analyzing and fine tuning several times a month. 

Those who know me know I spent several years in the vendor world before going in-house to a dealer. Because of this I hold my vendors to a very high standard and do not accept mediocrity from any of them. If a vendor does not meet my standards I have no problem moving on and finding one who will. DealerFire is one that has my respect in the PPC arena. (Calvin is great at what he does, and puts up with my constant emails with a smile.) Vendor relationships are no different than any other type of relationship, it needs to be based on mutual respect, communication and clear expectations.

Comment by Larry Bruce on April 22, 2014 at 5:53am

The fact is you're not wrong J.D. the value of PPC is not in the keyword buy, my 12 yr. old can do that. The value is in the result for PPC, that is where dealers have to look.

In reality the value for any marketing partner is in the result I wrote about this in a recent post  "What Is the Value Of A Digital Marketing Agency?"

It gets worse when these ROBO-PPC agencies try to automate this for "Scalability". This is great for them they don't have to think or work to get results just collect your budget money and convince you to spend more. Unfortunately that  "Scalability" is great for them but not so much for their client. PPC changes and no ROBO-PPC program can keep up.

Finally I love the PPC providers that tell clients.... "Look at the traffic you got!"

Of course you got the traffic YOU BOUGHT IT... YOU'RE SUPPOSED TO GET IT! NOW WHAT DID YOU GET FOR THAT TRAFFIC YOU BOUGHT?

Don't mean to go on a rant in your post JD this is just one subject that infuriates me. Thanks for posting and if you are one of those offended by this post get over it and fix your program don't bitch.

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