So let me break this down into three parts to make it easy. There are three costs that you need to pay when it comes using paid ads:
1.) Platform fee – this is the amount paid to the platform (Google, LinkedIn, Twitter etc.) in order to buy the advertising space on their channel
2.) Agency fee – the amount paid to the expert to build your keyword or audience lists to ensure that you are targeting the optimal group with your adverts
3.) Collateral fee – this is the fee paid for creative such as a video or a banner
Often this is aggregated into one fee to make things simple. Beware of this one simple fee, it could be that your agency is hiding something from you. Of course they might not be but my experience in the past is that this happens regularly.
So let’s go into a bit more detail on the costs that are involved.
So this is unavoidable right? This is just the amount that it costs to buy the advertising space? Well yes, but there are certainly ways that money can be saved. One thing that you need to be mindful of is that often this fee will be marked up by an agency or partner. I have no problem with this as long as it is done in an upfront and honest way. Say for example an organisation has a sixty day payment term meaning that the agency would have to wait a whole two months to be reimbursed. It is absolutely reasonable for the agency to add a percentage on to that fee.
However what I often see is up to 100% being added onto CPC. For me this is not ethical and it is something that needs to be stopped. Often when briefing agencies it is a good idea to brief a small portion of the work to a few different agencies this way you will get a better idea about what they are doing. When an agency offers to the campaign for a fee that seems far too small it is probably because they are taking their main fee from your ad spend.
Amounts paid to platforms can depend on the audience groups being chosen, keyword groups being targeted etc. but there are a number of costs that can fluctuate. It is your agency’s responsibility to work on this to try and prevent costs spiralling out of control. If your costs are escalating it is something that your agency should be able to explain to you.
For total transparency it is ideal for a company to pay the fee directly to the platform. Do this with a credit card, like American Express, that offers freebies like air miles. Then use the campaign spend to pay for your next trip away! 🙂
This is how much you are paying the agency to put your campaign together. This includes setting up your targeting, bid costs, consulting with you (the customer) and modifying the campaign to best fit your requirements.
Everyone deserves to be paid for the work that they do. Remember it is best to pay each of your prospective agencies to run a small part of your campaign to see how effective they are. As I said the most expensive agency fee sometimes may offer you the most value.
This is the fee paid for creating messages, images and videos. This is not really my area of expertise so I will offer a few recommendations here. I can create text based messages for search ads (which I don’t count as collateral though sometimes for paid media I have seen people charging £200 for these ads. These are literally a few words so I think that is massively extortionate) but for this collateral you should consult with a designer.
Video is time consuming and takes specific skills, especially if using animation. I think that sometimes using “behind the scenes” type footage, shot on a smartphone and then edited to look presentable, can work really well. If you are just using the designer to edit it may be cost effective to choose a freelancer using a site such as Fiverr.
Display or Programmatic banner ads can convert well in B2C for items that are bought instinctively like clothes and shoes. I have never seen them working well for B2B and should be avoided. Likewise banners used on social media with a company logo in the top corner, look corporate and are generally ignored. Remember social media advertising is about building your brand and eliciting an emotional response towards your company the use of banners is probably questionable