Standard pricing for Google Ad agency services include:
Account setup and campaign creation: Ranges from $500 - $5,000 Campaign management: $500 - $5,000+ per month or 10% to 20% of ad spendAdvanced keyword search: $1,000 - $5,000 onetime fee Ad creation and copywriting: $50 - $200 per ad groupLanding page optimization: $500 - $3,000 per pageGoogle ads hold about 28.6% of the global digital advertising market share. Google dominates the search engine with an 83.84% market share as of February 2024. This gives Google Ads unparalleled reach. 80% of businesses have used Google ads for marketing.
The rise of Google ads in digital marketing piqued the interest of many aspiring online entrepreneurs. There’s a promising business opportunity here. Businesses earn $2 for every $1 they spend on Google ads. However, with its success and dominance in paid advertising comes increased competition. The Google advertiser's population has grown to over 2 million. They spend from $100 to as high as $10,000 monthly. Those who aim for top positions in Google pay 30% to 50% more.
Despite the slim profit margin of only 10% to 20%, many are still enticed to try the digital advertising business. This article breaks down common pricing models every new agency owner needs to know. It also explains the factors that affect Google ad pricing, the services offered by agencies, and how much they typically cost.
Google Ads Agency Pricing for Standard Services
| | |
|---|
Account setup and campaign creation | $500 - $5,000 onetime fee | Account set-up, keyword research, ad group creation, ad copywriting, landing page recommendations |
| $500 - $5,000+ per month or 10% to 20% of ad spend | Key metrics reporting, insights, and recommendations |
| $1,000 - $5,000 onetime fee | In-depth keyword research, competitor analysis, long-tail keywords, and keyword mapping |
Ad creation and copywriting | | Responsive search ad creation and Ad extension setup |
Landing page optimization | | Landing page review, conversion rate optimization recommendations, A/B testing |
| $500 - $2,000 for the initial setup, plus $200 - $1,000 monthly | Remarketing list creation, display ad design, campaign setup, and management |
Google shopping campaigns | $1,000 to $5,000 for setting up the account, plus $500 to $3,000 for monthly management | Product feed optimization, shopping campaign setup, ongoing bid management, and product group optimization |
| | Monthly performance reports, custom dashboard setup, competitor analysis, insights and recommendations |
Local SEO and Google My Business Optimization | | Local keyword optimization, GMB profile management, and review management |
| | Banner ad design and responsive ad creation |
| $500 - $5,000 onetime fee | Comprehensive review of account structure, settings, and performance |
Top 8 Ad Agency Pricing Models
- Percentage of Ad-Spend Model: This model charges a percentage of the client's total ad spend. Agencies typically charge 10%-20% of the total ad spend budget. For example, if a company spends $10,000 on ads, the agency could charge between $1,000 and $2,000. It is ideal for clients who have moderate to large budgets. This pricing model is best applied to clients with growth potential.
- Flat Fee Model: Agencies charge a fixed monthly fee regardless of ad spend or performance. This could range from $500 to $5,000, depending on the complexity and scope of the campaigns. 34% of agencies use this model. It’s preferred by clients who want predictable and consistent billing. Agencies that offer standardized services use the flat fee model.
- Hourly Rates Model: These can range from $30 to $150 per hour. New agencies charge from $30. Established agencies with niche specialization may charge as much as $150 per hour. According to a survey by Credo, PPC specialists charge $136 per hour. Agencies bill for the time spent managing campaigns. The rates range from $75 to $200 per hour. This model is uncommon for account management services. It’s widely used for account setup and consulting.
- Performance-Based Pricing Model: The agency charges based on the actual performance of the ads. This model is often combined with a base retainer. Clients usually give incentives for achieving targets based on actual conversions. Compensation is tied to metrics like Cost Per Acquisition (CPA) or Return on Ad Spend (ROAS). For instance, an agency might charge $50 per qualified lead or 5% of revenue generated from ads.
- Project-Based Pricing Model: A fixed fee is charged for a specific project or campaign. This model is often used for onetime projects or campaign launches. In this model, the price varies depending on the project’s scope and complexity.
- Tiered Pricing Model: Agencies offer different service levels at set price points. The basic tier starts at $1,000 per month for campaign management and reporting. A median tier typically starts at $2,500. This price covers basic services plus weekly optimizations and strategy calls. Premium tiers typically range from $5,000 per month. This includes comprehensive account management, strategy, and creative services.
- Value-Based Pricing Model: It is based on the estimated value the agency is expected to provide to the client's business. It’s a less common model, but is gaining traction now in the advertising industry.
- Hybrid Pricing Model: A combination of two or more pricing models. For example, the flat fee model can be combined with tiered pricing. Hybrid pricing is a practical approach for many businesses.
Ad Agency Owners Share How Much They Charge For Services
This agency owner offers three service packages. The basic package costs $499 per month and an ad spend of up to $2,000. Standard package is offered at $899 and $7,500 maximum ad spend. He uses the percentage model for this enterprise package. It is 15% of the total ad spend.
This small business owner shares how much he typically pays ad agencies. He pays 12% with a minimum of $750 ad spend monthly. He also shared that he doesn't trust agencies who charge $500 upfront. Agencies who charge from 10% to 15% (max) are pricing their services right.
This Reddit commenter explained that 20% is the highest agency owners should ask for. Only big and established agencies could charge this much. He suggests charging a flat fee if you're a new agency. $800 for projects between $1,000 to $10,000 is a good starting rate. He also suggests adding another 5% of the total ad spend for projects between $10K to $50K.
SF Digital Studios, which has been in the business for over 21 years, recommends the percentage ad spend model for beginners. They suggest starting at around 25% with a minimum fee. Gradually lower the percentage you charge as the client’s budget increases. This creates a win-win opportunity wherein both parties benefit from increased ad spend. New agencies are warned against using the fixed pricing model, as it limits scalability. This model leads to burnout as the client’s needs grow.
How are Google Ads Priced?
- Bidding: Advertisers bid on keywords relevant to their ads. They set a maximum bid they're willing to pay when someone clicks their ad for a given keyword.
- Quality Score: Google determines the quality score of each ad based on CTR and ad relevance.
- Ad Rank: This determines the ad’s position in the search engine. It is calculated by multiplying the maximum bid by the quality score.
- Actual Cost Per Click: The actual amount charged per click is often less than the maximum bid. It is then re-calculated by dividing the ad rank by the quality score plus 0.01. You only need to pay the minimum fee to maintain your ad’s position.
- Industry, Competition, and Location: CPC increases in competitive industries. The cost fluctuates based on location and the time of day/year.
Factors that Affect Google Ads Pricing
- The Google Ad Agency’s Experience and Expertise: This includes years in business and niche specialization. Ad agencies that are at least five years old charge higher because of their experience. Those with niche expertise charge 20% to 30% more.
- Industry Where You’re Advertising: Competitive industries like legal, finance, and insurance are typically more expensive. The average CPC in the legal industry is $6.75. Less-expensive industries like e-commerce are only $2.32 per click.
- Complexity of the Campaign: Projects with 1 to 3 campaigns are cheaper. Complex ones with more than a hundred campaigns running are more expensive. Automated bidding and custom scripts also increase the cost.
- Geographic Targeting: Local campaigns are cheaper because they’re easier to manage. National campaigns are more complicated to manage and monitor. As a result, they charge higher.
- Tools and Software Used: The tools and software used also affect Google ad agency pricing. Projects that use proprietary tools add the cost to the campaign budget. Agencies who optimize with AI charge at least 5% more.
- Historical Performance: Ad agencies charge more for accounts that have poor historical performance. Restructuring old campaigns is typically more expensive. Some agencies even give discounts to high-performing accounts.
How Much Does PPC Management Cost?
PPC management costs from $250 to $5,000 per month. Some agencies use the percentage model and charge from 10% to 20% of the total ad spend. The actual PPC management cost varies based on several factors. Factors like the complexity of the campaign and the competitiveness of the industry affect PPC management costs. The number of campaigns to be managed and how often the campaign is optimized will also affect PPC fees.
What are the Different PPC Pricing Models?
- Cost-Per-Click: It is the most common pricing model used by Google Ads. Advertisers pay each time a user clicks on their ad. CPC is good for driving traffic to websites and generating leads.
- Cost-Per-Mille: It is most useful in brand awareness campaigns. Advertisers pay for every 1,000 ad impressions, regardless of clicks. It is often cheaper than CPC. However, it may not drive as much direct engagement.
- Cost-Per-Acquisition: It’s one of the most low-risk pricing models because advertisers only pay when a user completes a desirable action. However, the per-conversion rate is also more expensive than other models.
- Cost-Per-Lead: This model is popular in B2B marketing and service industries. Similar to CPA, but focused specifically on generating leads. Advertisers pay when users submit contact information or sign up.
- Cost-Per-View: This pricing model is common on YouTube and TikTok. Advertisers pay when a user watches a video ad for a certain amount of time.
- Viewable Cost-Per-Mille: A variation of CPM where advertisers only pay for viewable ad impressions.
- Cost-Per-Install: This pricing model is popular in the mobile gaming industry. Advertisers only pay when a user installs their app after clicking on an ad.
- Cost-Per-Engagement: It is useful in rich media ads and social media campaigns. Advertisers pay when users engage with their ad in a specific way.
Iman Ghadzi Shares 3 Pricing Mistakes Agency Owners Make
- Google advertising agencies price based on time instead of value. Iman Ghadzi said clients care about results, not the time it takes to deliver them. Value-based pricing values the outcome rather than the time spent. It often makes more profit for the agency.
- Google advertising agencies charge less to reduce risks. However, lower fees also signal inexperience and lower quality. Clients often feel safer with agencies that charge more.
- Google advertising agencies scale by adding more clients. Instead of constantly onboarding more clients, agencies should focus on increasing the value they deliver to existing ones.
Should Small Businesses Use Google Ads?
Google ads can work for small businesses. However, the advertiser (owner or agency) should have a deep digital marketing knowledge to succeed. Small businesses typically have smaller advertising budgets. The advertiser should be able to allocate it correctly to get the best results. Choosing the right keywords for the campaign is essential to small businesses. Advertisers should focus on specific, long-tail keywords relevant to their niche. Use negative keywords. This reduces ad wastage on irrelevant ads.
My Online Biz Leverages Free Traffic, Not Paid Ads
My online biz leverages free traffic because it’s more sustainable long-term. I generate consistent free traffic through a business model called local lead generation. This biz builds simple websites for local service providers and ranks them on Google. It is ideal for businesses with small budgets because it does not need a big upfront investment. Organic SEO efforts can sustain traffic over time, unlike paid ads that stop when you stop paying.
Once you rank yourself in Google with local lead gen, traffic continues to flow. What’s even better is organic traffic has a higher conversion rate. This is because customers trust organic searches more than paid ads. Businesses that appear organically in search results are perceived as more credible and established. As your online presence grows, you discover more expansion opportunities. Without the limitations of a physical presence, local lead gen lets you target multiple local areas without increasing your ad spend.
