PPC Gross Margin...

Hi All.

While our business did not start out in online advertising, we are now doing PPC for quite a few customers.

Our model goes like this:
1) client wants to spend "X" on PPC >
2) we do the online ad buy across multiple search engines and take some percentage of X as our gross margin

My questions is, what percentage of "X" are other PPC firms taking?
Does it depend on your size of the spend?
Do you add other fees on top of the PPC spend?
Do you have the client sign a contract or is it on a month to month basis?

I am looking for general PPC industry standards here... or maybe just strong opinions :-)

Thanks for your help.

R.

If you go with the traditional agency media buy model, you take a 15% markup. That is kind of high though, and does not really encourage the company to spend more wisely, only spend more.

If you want to use a more performance-based model for your clients, you could charge by lead, conversion, return on ad spend, if you have a way to measure it and do it fairly for both sides. Our agency just charges by the hour for all things ppc and seo, which isn't the greatest model either. Some type of value-based hybrid would be better I'm sure. Example: One company may be selling small widgets with a low margin. Unfortunately, those would take the most monitoring. While another company may have a service that will net them 100k per landed client. The key is getting that type of business info early on.

GaryTheScubaGuy has an interesting of charging for ppc management. You might look back at some of his posts.

We will charge the 15% if we have to use the company card, but typically we try to get all ppc expenditures to go straight to the client's card.