PPC Management Costs, Benefits and Strategies [2024 Update]

Pay-per-click (PPC) advertising is a digital advertising model in which businesses pay advertisers when someone clicks their ads. PPC ads are commonly found on search engine results pages (SERPs) and Facebook.

The biggest reason PPC marketing is a resounding success is that small and medium businesses with a marketing budget of a few hundred to a few thousand dollars can achieve the reach that previously only massive budgets allowed.

However, most business owners have no idea about the cost of PPC management. What is the ad spending, what does the agency charge, and how much is the investment needed? These are important to know before you sign up.

In this article, we look at:

State of PPC in 2024
Cost of PPC management
PPC management agency pricing models
Different types of PPC agencies
What’s included in PPC management services?
Is PPC management worth the investment?

First, let’s take stock of where PPC advertisements stand in 2024.

State of PPC in 2024

PPC has been around since 2000. That was the year Google launched the first PPC ad platform. After a quarter of a century it has gained traction and is considered one of the best ways to reach out to customers.

Here are some PPC statistics for 2024 that you might find interesting:

On average, small to mid-sized businesses invest about $6,000 to $10,000 per month in PPC campaigns.
Research has shown that businesses generally make $2 for every $1 spent on PPC.
65% of small to mid-sized businesses have included PPC campaigns in their marketing efforts.
The average CPC varies depending on the platform and industry and generally falls between $0.11 and $0.50.
Projections for 2024 indicate a massive $306 billion global spend on search advertising. This emphasizes the widespread adoption and significance of PPC.

These statistics amply display the significant role PPC advertising plays in today’s digital marketing landscape.

But you have to harness its potential and make it work for your benefit. That requires an expert PPC management agency. In the following sections we shall look at the costs associated with professional PPC management.

Cost of PPC management

Managing a pay-per-click (PPC) campaign involves several costs that require careful consideration.

Cost components of PPC management

Let’s understand the 3 key cost components.

1. Ad Spend

The most significant cost is the budget you allocate for your PPC ads.

The cost of PPC ads vary immensely depending on these factors:

Keyword Competition
Maximum Bid
Quality Score
Ad Rank
Industry and Target Audience
Time of Day and Location
Ad Format and Placement
Competitor Bidding
Seasonality and Trends
Device Targeting

To decide your ad spend, you need some data, mainly:

The average CPC for the advertisement platform of your choice
The conversion rate of the landing page/web-asset on which the users will land when they click the ad
The average order value linked to the landing page/web-asset

Note: We’ve assumed sales to be the goal for this PPC campaign, even though your goal might be different (such as brand awareness, get subscriptions, etc.)

Here is a table with the average cost-per-click (CPC) for the major PPC channels.

Channel	Average CPC (USD)
Google Ads	$1 – $2
Google Display Network	< $1
Google Search Network	$1 – $2
Microsoft Advertising	$1.54
Facebook Ads	$0.44
Remarketing Ads	$0.66 – $1.23

Now, let’s determine the ad budget needed to achieve $500,000 in sales using Facebook Ads, where the average CPC is $0.44.

Sales Goal: $500,000

Assumed Average Order Value (AOV): $100

Assumed Conversion Rate (CR): 5% (0.05)

Average CPC: $0.44

Here’s an overall summary of PPC ad campaign costs, expressed in CPC and CPM:

Number of conversions = (Average Order Value/Sales Goal) = 500,000/100 = 5,000 conversions

Next, calculate the number of clicks required to achieve 5,000 conversions:

Number of clicks = (Conversions/Conversion Rate) = 5,000/0.05 = 100,000 clicks

Now, calculate the ad budget needed to get 100,000 clicks:

Ad Budget = Number of clicks × CPC= 100,000 × 0.44= $44,000

Of course, you might not allocate your entire PPC budget to Facebook Ads. Still, you can calculate your ad-spend using average CPC across all platforms, as mentioned in the table below.

Metric	Average cost
Cost per click (overall average)	$2.59/click
Cost for mille (overall average)	$3.12/1000 impressions

2. Management Costs

This is the second part of the equation and no less important for your marketing budget.

Who manages the bids? It is an ongoing activity and has to be constantly monitored.

Will you manage your PPC campaigns in-house or hire an agency?

In-House

In-house PPC management means you will need a dedicated team.

Usually, this consists of:

PPC Manager (and team leader) who oversees strategy.
Copywriter who creates the ad copy.
Graphic Illustrator who creates visuals.

For larger campaigns, you would need more people for writing, designing, optimization, and analysis.

If you choose to manage your campaigns internally, there is the cost of salary and benefits.

While it offers you more control, it is too expensive an option for most small and medium businesses.

Agency

The other route is hiring a PPC agency for PPC management services. This involves a fee for their services.

This fee varies by a lot depending on the agency’s size, expertise, and the scope of your campaigns.

The key types are:

Full-Service Digital Marketing Agencies: These agencies provide comprehensive services – PPC, SEO, content marketing, and social media.
Specialized PPC Agencies: These agencies focus solely on creating, managing, and optimizing PPC campaigns across diverse platforms like Google Ads and Facebook.
Boutique Agencies: These agencies offer highly specialized and highly personalized PPC services to a limited clientele.
Enterprise-Level Agencies: These agencies cater to large corporations with extensive budgets and can manage large-scale PPC campaigns across the globe in several languages.

It’s also essential to understand the agency’s pricing model. It might be a flat fee, a percentage of ad spend, or performance-based. We will discuss this in greater detail later.

Note: On average, a PPC management agency costs anything between $500 to $2,500 per month.

3. PPC Management Tools

In addition to ad spend and management costs, you’ll likely need to invest in PPC management tools. These tools help in:

Campaign Creation and Management
Keyword Research and Bidding
Ad Creation and Optimization
Performance Tracking and Reporting
Automation and Optimization
Competitive Analysis

There are many excellent tools for these tasks. Some of the best and most affordable are:

Google Ads Editor: A free tool for managing large Google Ads accounts.
Semrush: A comprehensive suite of tools for SEO and PPC.
Optmyzr: An AI-powered platform for optimizing PPC campaigns.

We have explored the various costs involved in PPC management. Now time to understand how PPC agencies typically charge for their expertise.

PPC management agency pricing models

The pricing structure an agency adopts influences the cost of PPC management to a large extent.

There are several prevalent models, each with its pros and cons. Therefore, it is essential for you to select the one that aligns with your objective and budget.

Let’s explore the most common PPC pricing models.

1. Flat Fee

A flat fee refers to a fixed amount charged by an agency for its PPC management services. This pricing structure brings transparency and budget certainty. It also eliminates surprises and allows easier financial planning.

However, this model is not very flexible and doesn’t account for changes in the campaign style and intensity. Some agencies offer tiered flat fees, with several price points which can provide more options for businesses with varying PPC needs.

Pros	Cons
Predictability Businesses know exactly how much they will be spending each month. This helps in budgeting and financial planning.	Lack of motivation Since the fee is fixed, the agency might not be very motivated to optimize the campaign for the best possible performance.
Simplicity There’s no need to constantly track spending or worry about costs. This reduces administrative burdens.	Possible overpayment You might be paying more than necessary if your campaign needs are lower than what the flat fee covers.
Consistency The relationship between the agency and the client is stable since the fee doesn’t change based on ad performance or spending.	Less flexibility Adjusting the fee structure can be difficult if the PPC strategy needs change over time.

2. Percentage of Ad Spend

This PPC pricing model is based on a percentage of your total advertising budget paid as an agency fee. The percentage usually ranges from 10-20% but can vary depending on the agency’s expertise and campaign complexity.

This model offers the agency more motivation to achieve the best possible results.

However, it is more uncertain from a budgeting point of view. The agency fee will fluctuate depending on your PPC ad spend.

Pros	Cons
Better motivationThe agency’s earnings increase as the client’s ad spend rises. This provides the agency a motivation to optimize the campaign.	Cost uncertaintyMonthly fees can vary significantly and this makes it difficult to budget in advance.
ScalabilityThis model scales with the client’s budget, making it suitable for businesses of all sizes. As the marketing budget grows, the agency’s fee climbs.	Risk of overspendingAgencies might try and increase ad spending unnecessarily to boost their own earnings.
TransparencyIt’s clear how much the agency will earn based on ad spend. This makes it easier for businesses to understand the cost structure.	Possible conflictThere is a potential for conflict if your return is less than what was projected.

3. Performance-Based Pricing

Performance-Based Pricing (PBP) is a PPC pricing model where the agency’s fee is directly related to the results achieved in the campaigns.

This model is based on specific KPIs like leads generated, sales conversions, or return on ad spend (ROAS).

PBP aligns with the interests of both the business and the agency since both want to achieve optimal results.

Pros	Cons
Performance metrics measurement: Agreeing on performance metrics can become complicated. The agency might want fees based on CTR but you might be interested in leads generated.	Potential for higher costsIf the campaign performs exceptionally well, the agency’s fees could be higher than with other models.
Focus on results. This model ensures that the agency prioritizes campaign outcomes that matter most to the business.	Risk sharing: The financial risk is shared between the business and the agency. If the campaign doesn’t perform well, the agency earns less.
Focus on resultsThis model ensures that the agency prioritizes campaign outcomes that matter most to the business.	Unsuitability for all campaign typesNot all campaigns are easy to measure in terms of direct performance. Hence this model has its limitations.

4. Hourly Rate

In this model, PPC management agencies charge clients based on the actual time spent managing their campaigns.

The hourly rate can vary depending on the agency’s expertise, experience, and location.

This model offers transparency and allows businesses to pay only for the work performed. This makes it a viable option for those with a specific one-off project.

Pros	Cons
TransparencyClients know exactly how much time is being spent on their campaigns and what they are paying for.	Potential overbilling: There’s a risk of the agency spending more hours than necessary, which will lead to higher costs.
Limited incentives: The agency is paid based on hours worked, not performance, which reduces its incentive to optimize campaigns.	Flexibility: The model allows for adjustments based on the amount of work needed at any given time.
Cost ControlBusinesses can control costs by limiting the number of hours allocated to their campaign management.	Cost control businesses can control costs by limiting the number of hours allocated to their campaign management.

5. Hybrid Model

This model combines elements from different models. It tailors the approach to the specific needs of the client.

A PPC agency might charge a flat fee for initial setup, and then a percentage of ad spend for ongoing services. Alternatively, they might combine a base fee with hourly rates.

This flexibility allows for customization and can be a good option for both agencies and businesses.

Pros	Cons
Potential conflicts Differences in hybrid models can lead to conflicts regarding goals and incentives.	ComplexityManaging a hybrid pricing model can be more complex than a single PP pricing model.
FlexibilityThis model can be tailored to the specific needs and circumstances of the client.	Higher costs: The hybrid model might end up being more expensive due to the combination of different fee structures.
Risk mitigationSharing the cost structure can balance the financial risk between the client and the agency.	Flexibility: This model can be tailored to the specific needs and circumstances of the client.

What’s included in PPC management services?

Many business owners have no understanding of the services they can expect from PPC management services.

Here’s what you can typically expect from a full suite of PPC management services:

Source

1. Keyword research

Conducting thorough keyword research is essential for any PPC campaign.

This means identifying the most relevant and effective keywords to target. PPC managers use tools like Google Keyword Planner to find high-performing keywords. They analyze search volume, competition, and cost-per-click (CPC) to select keywords that will drive traffic and conversions.

This process ensures that the ads reach the right audience and bring you leads.

2. Ad creation

Crafting compelling ads involves designing and writing ad copy that matches your brand voice and appeals to the targeted audience.

Multiple ad variations are created, each tested to find which performs best. Good ad copy ensures the effectiveness of your marketing message.

3. Landing page optimization

Optimizing landing pages is crucial for converting clicks into actions.

To increase conversion rates, the landing page content has to match the ad. Techniques like A/B testing are used to identify and use the best-performing elements.

PPC management agencies improve the design and functionality of landing pages to provide a perfect experience.

4. Campaign setup and management

Setting up and managing a PPC campaign has many aspects. PPC management services have to create bid strategies and manage targeting options.

They make adjustments to bid as needed so that the campaign stays on track and achieves the desired results.

Regular monitoring allows for quick identification and resolution of any problems that may arise.

5. Performance tracking and reporting

Tracking the performance of PPC campaigns is vital for making bid and keyword adjustments.

PPC managers use analytics tools to monitor key metrics such as click-through rates (CTR), conversion rates, and return on ad spend (ROAS).

Regular reports from them will keep you informed about campaign performance. These reports provide insights into what is working and what may need adjustment.

6. Competitor analysis

Analyzing the PPC strategies of the competition can provide valuable insights. Competitor analysis is the process of thoroughly evaluating your competitors’ PPC strategies.

To do this, PPC managers examine the following:

Keywords
Ad Copy
Landing Pages
Ad Spend
Performance

By staying informed about your competition, you can maintain a competitive edge.

7. Setting up remarketing campaigns

Remarketing campaigns target users who have previously visited your website but did not convert. PPC managers set up these campaigns to re-engage with potential customers.

Remarketing can improve conversion rates since it focuses on an already interested audience. These campaigns remind users of your products or services and encourage them to return and complete the purchase.

8. Bid management

Effective bid management is crucial for maximizing the ROI of PPC campaigns.

PPC managers use both automated tools and manual strategies to adjust bids on keywords. The goal is to achieve the highest possible return by paying the right price for clicks.

Bid adjustments are made for different devices, locations, and times to ensure the best results.

These services by a PPC management agency can significantly enhance your advertising efforts. It is a continuous process that ensures that campaigns remain effective yet affordable.

Is PPC management worth the investment?

Yes absolutely. Having a strong online presence is crucial for any business. The pay-per-click model ensures you only pay when someone clicks on your ad. It is a very affordable way to raise your brand visibility.

Cost-Effective Lead Generation

With PPC advertising, you only pay when someone clicks on your ad. This focus on action-driven results makes PPC effective for lead generation.

For example, a successful Facebook ad campaign brings $2 to $5 in revenue for every dollar invested in advertising.. By targeting users who show interest in your offerings, you ensure that your marketing spend is going to generate leads.

Instant Visibility and Credibility

PPC ads can place your business at the top of search results instantly, boosting your credibility and attracting clicks.

WordStream reports that PPC visitors are 50% more likely to make a purchase than organic visitors. This quick visibility is a huge advantage for businesses seeking immediate results. It also perfectly complements the long-term benefits of SEO.

Additionally, a Clutch study found that 75% of people say paid search ads make it easier to find the information they need. This adequately highlights the value of top search positions.

Data-Driven Optimization and Measurable Results

PPC campaigns provide comprehensive performance data. Metrics like keyword rankings, traffic sources, and conversions are easily tracked. This allows PPC experts to continuously monitor, analyze, and optimize campaigns.

For instance, Google Ads and Bing Ads offer detailed analytics showing real-time ad performance. This data-driven approach ensures your advertising budget is used wisely, maximizing your return on investment (ROI).

HubSpot found that businesses using PPC reported a 50% higher ROI compared to those not using paid search.

Flexibility and Scalability

PPC advertising offers great flexibility and scalability. You can adjust your budget, targeting, and ad copy to respond to market changes or test new strategies.

Google states that businesses using ad extensions on PPC ads can see a 10-15% increase in click-through rates.

This flexibility allows for continuous improvement and scaling of successful campaigns, helping your business grow.

Targeted Advertising

A key feature of PPC is the ability to target specific demographics, locations, and times of day. This ensures your ads reach the right audience.

For example, Facebook Ads Manager lets you target users based on age, interests, and behavior. eMarketer reports that targeted ads see 37% more engagement than non-targeted ads.

This precision targeting leads to higher conversion rates and better campaign performance.

Enhanced Brand Awareness

PPC is not just for direct conversions; it also enhances brand awareness. Display ads, for instance, are seen by users even if they don’t click on them, keeping your brand visible.

Google found that search ads can increase brand awareness by 80%.

Driving immediate action and building long-term recognition makes PPC a versatile marketing tool.

So what’s next for you?

With so many PPC ad options available, it can be trying to determine the best strategy for your business. However, the one that consistently yields results is Facebook Ads.

Facebook Ads (now Meta Ads) offer a vast audience and precise targeting capabilities. This ensures your message reaches the right people.

At Retain IQ, we specialize in Facebook Ads. We’ve helped brands in ecommerce, healthcare, lifestyle, travel, and more achieve impressive returns.