PPC agency: fee models and what to audit first
Hiring a PPC agency? How each fee model shapes the agency's incentives, and the ten account settings to audit first, before any new campaign launches.
By Roozbeh Nazari · CEO
When you hire a PPC agency, two decisions shape the next year more than the agency's pitch deck does: how the agency is paid, and what it looks at first. The fee model decides which behaviour is rewarded. The first audit decides whether the agency builds on a sound account or scales a broken one. This article covers both from the buyer's side, with no price benchmarks, because published price ranges vary so much between markets and sources that quoting them would mislead more than help. For the scope and KPI side of a paid search contract, see our earlier article on Google Ads consulting scope and fee models; here we focus on incentives and the audit.
Fee models and the incentive each one creates
Every fee model is reasonable in some situation. The question is what each one quietly encourages, so that you can write the contract to counterbalance it.
- Percentage of ad spend: the fee grows when the budget grows. This aligns the agency with scaling, and it can create a mild pull towards recommending more spend. Counterbalance it with an efficiency target, such as a cost per qualified lead, that must hold before a budget increase.
- Flat monthly retainer: the fee is predictable for both sides and does not change with spend. The risk is effort drifting down once the account is stable. Counterbalance it with a written list of recurring tasks and a change log you can inspect.
- Tiered or hybrid (a base fee plus a percentage above a spend threshold): common for accounts expected to grow. Check where the thresholds sit relative to your planned budget, so that a small increase does not trigger a large fee step.
- Performance-based (a fee per lead, sale or share of revenue): attractive in theory. In practice it depends entirely on what counts as a conversion and who controls the tracking. If the agency controls both the definition and the measurement, the incentive to count generously is obvious.
- Hourly or project fees: suited to audits, rebuilds and training. Ask for a fixed scope and a deliverable, not an open timesheet.
Whatever the model, Google's transparency requirements for third parties set a floor. If a partner charges a management fee on top of the cost of Google Ads, it must clearly inform you of it. Where the partner's advertising terms with Google require a monthly performance report, that report must include cost, click and impression data at the Google Ads account level. And the partner must give you your Google Ads customer ID when you ask for it. A PPC agency that resists any of these is outside Google's own rules, not merely unusual.
Two practices go beyond that floor and are our recommendation rather than Google's rule: show the management fee as a separate line on every invoice, and send the account-level cost, click and impression data every month whether or not a formal report is required. Both make it easy to check that the fee model is doing what the contract says, and both cost a competent agency nothing.
PPC services: what to audit first, in this order
A good PPC company starts with an audit before it touches bids. If you are evaluating an agency, ask to see what their first audit covers. If you are auditing yourself before a handover, this is the order we use in our paid media work.
- Conversion actions: which actions are set as primary, whether they fire once or many times per visit, and whether any duplicate each other. Everything downstream depends on this.
- Auto-applied recommendations: which ones are switched on. Some can change keywords, match types or budgets without anyone reviewing them.
- Location settings: whether campaigns target people in your locations or also people showing interest in them. The second option can spend money on audiences you cannot serve.
- Networks: whether search campaigns also run on search partners or display expansion, and whether that was a deliberate choice.
- Search terms: what people actually typed before clicking, compared with the keywords you meant to buy.
- Brand versus non-brand: whether branded searches are separated, so that their cheaper conversions do not flatter the overall cost per acquisition.
- Budget limits: which campaigns are limited by budget, and whether they are the ones that deserve more money.
- Landing pages: whether each ad group sends people to the most relevant page, and whether that page loads and converts on mobile. Our CRO and UX work often starts here.
- Attribution and reporting: which attribution model is in use, and whether ad-platform conversions reconcile with your CRM or sales records.
- Change history: who changed what in the last 90 days. It is the quickest way to see how the account has actually been managed.
Why the audit comes before the fee conversation ends
The audit tells you how much of the work is repair and how much is growth. An account with duplicate conversions and broad location targeting needs weeks of cleanup before any scaling makes sense, and that affects which fee model is fair. A percentage-of-spend model on an account that first needs to spend less is misaligned from day one; a project fee for the cleanup followed by a retainer is often a better fit in our experience.
Reading badges and claims
The Google Partner badge shows that a company meets Google's requirements on optimisation score, managed spend and certifications. That is useful evidence of platform competence. It does not describe results for accounts like yours, and no badge allows anyone to guarantee positions or a fixed return. When an agency shows case results, ask what was measured, over what period, and how conversions were defined. On our own results page we try to follow the same rule: describe the work and the measurement, not a promise.
A short checklist before you sign with a PPC agency
- The fee model is written down, including thresholds and what triggers a change.
- Management fees are invoiced separately from media spend.
- You own the ad accounts, billing and conversion tracking; the agency has user access.
- The first 30 days are defined as an audit and cleanup phase with a written deliverable.
- Reporting shows account-level cost, clicks and impressions every month (Google requires this data in any monthly performance report its partner terms call for; we recommend asking for it either way).
If you would like a second opinion on an existing account or a proposal you have received, you can contact us. We will tell you what we would audit first and which fee model fits the work, without promising a result the data cannot support.