Setting Realistic Expectations For Outsourced PPC Management

Jupiter Research states: Nearly three-fourths of companies that outsource their pay-per-click search marketing to agencies are dissatisfied with their results, and only 21 percent are completely satisfied.

What’s the reasoning behind all the dissatisfied advertisers?  Most agencies skews results towards the  biggest spenders. Agencies will also never really understand your customer therefore they target many irrelevant search terms driving your spend and not calls. Last most advertising agency’s or PPC Management firms don’t set realistic expectations during their sales presentations, instead many times they feed you numbers they think you want to hear rather than listing best-worst scenarios and establishing groundwork for what you can expect.

If your a small business owner and you happen to read this weather for self-education or complaints use this as a tool to better understand how outsourcing can benefit you when expectations are set correctly from the beginning.

If your a SEM provider – use this as constructive criticism to listen to your advertisers needs. My words can be used as a tool to educate your sales force on building clients trust by setting up realistic expectations.

Let’s start here:

Local Internet Advertising or PPC Management firms typically things 1 of 2 ways. They either take a large % out of your monthly budget as a “Management Fee” or they charge you a large “Management Fee” and tack it onto your allotted monthly ppc budget – either way it works out to be the same in the end.

I’m sure you’ve heard your sales rep say they take only a small undisclosed % out of your budget – here is a more realistic view on what’s really being thrown towards PPC and what goes towards Management Fees.

Now that you know how most PPC Management firms hide the cost in a ‘undisclosed %’ let’s look at some realistic expectations once the large management fee is subtracted from your budget.

Basic PPC Management model:

1. Advertiser Budget: $1000/mo.
2. PPC Management Fee: -$500/mo.
3. Clicks Expected based on average of $5/click: 100 Clicks

Alright so 100 clicks for $1,000  isn’t too bad if your website produces a higher conversion rate (CR.) You  also have to consider what your point of sale average profit is (POS). Businesses who have a low POS might want to consider something else vs. a company who has a larger POS  might make more sense.

*Note: a 5% conversion rate is AVERAGE. Don’t base your decision on the mindset that 50% of site visitors are  going to pick up the phone and call you.

Conversion Rate (CR) Cost-per-lead (CPL) model:

1. 5% CR: 5 leads @ $200/CPL
2. 10% CR: 10 leads @ $100/CPL
3. 15% CR: 15 leads @ $66.66/CPL
4. 20% CR: 20 leads @ $50/CPL
5. 25%CR: 25 leads @ $40/CPL
6. 50%CR: 50 leads @ $20/CPL

Now that you know the basic formula for finding what your cost per lead is (total ad-spend/leads)=CPL. Pretty simple right? Now make sure you set yourself up for realistic expectations. If you pay a company $2500/mo. expect they  will take $1250/mo on average for management fee.

Now – let’s look at the more positive side  of things… Some PPC Management firms are worth their weight in Gold, it’s up to you to do the research to find which companies best fit your needs and wants as a business. Many provide invaluable tools to track ROI, Algorithms that tell the PPC Management campaign where your best bang for the buck is as well as typically a significantly discounted cost-per-click rate then you would typically see doing PPC yourself.

Granted – this isn’t the case for all PPC Management firms – but it is for .