Ep 61 – Why Paid Media Management Fees Exist

To the Wizard! Today, we’re pulling back the curtain on one of the most misunderstood costs in contractor marketing: paid media management fees.

Whether you’ve wondered why agencies charge 15-25% of ad spend or questioned what exactly happens behind the scenes, this conversation breaks it down in plain English.

From Google Ads optimization to negative keyword management, reporting transparency, and how often campaigns really need a tune-up, we cover what contractors should expect (and demand) when trusting someone else with their ad dollars. 

In this episode of Trades Secrets, we’re here to set the record straight and ensure every penny counts for your business when it comes to paid media and an agency partnership.

What’s In This Episode?

1. Learn what the 15-25% Rule and when flat fees make sense.
2. Understand the tweaks and tasks agencies should be making weekly when it comes to ads, copy and landing pages. 
3. Learn what Red Flags in reporting looks like. 
4. Understanding what testing and ROI looks like and what will burn through your budget. 

Devon Hayes:
Oh, fantastic. How are you doing?
Amanda Joyce:
Good. I cannot believe that we are like already in September.
Devon Hayes:
I know. Will you wake me up when September ends? It’s a crazy month. I think I’m going to say that to my husband because I think we are both gone so much this month and it’s all fun. It’s all Elevation stuff. Well, I have a little bit of fun, but anyways.
Amanda Joyce:
Yeah, but it definitely makes the time fly by and kind of why we’re talking about what we are today just because we’re nearing the end of the year, and it seems like it’s really timely for everybody to start really thinking about where marketing dollars are going, what people are spending money on.
So we’re excited to dive in today and just kind of explain to you guys why there’s a cost associated with paid media management and maybe some smart questions you can ask if you are talking to an agency that you might be considering to hire for that service.
Devon Hayes:
Welcome to Trade Secrets, where we demystify digital marketing to help contractors get the most bang for their marketing bucks.
Amanda Joyce:
This is for you if you’re a contractor looking for actionable marketing insights.
Devon Hayes:
Learn from home services industry experts to elevate your business through simplified marketing strategies.
Amanda Joyce:
Let’s dive into today’s trade secret.
Devon Hayes:
All right. So why do you have to pay for paid media management? Why is that a monthly fee?
Okay, wait. Here’s some burning questions hot off the presses. Why is there a monthly management fee? These are some FAQs around paid media that we’re addressing today.
So why is there a paid media management fee? What’s the industry average and what service am I actually paying for beyond campaign setup?
I think everybody understands a setup fee, they understand the campaign, but I don’t think they understand what exactly goes into the monthly paid media management.
So I threw a whole lot at you. Let’s start with, let’s just talk Google Ads, paid media, like that management fee. Why does it exist and what’s the industry average, I guess? Let’s dive in.
Amanda Joyce:
Okay. So industry average can range anywhere from 25% of ad spend, it can get lower than that, but it’s anywhere from 15 to 25%, depending on the kind of amount of hands-on work that’s happening in a campaign. At Elevation Marketing, we typically charge a flat fee up to a certain spend, and then we start charging that 20 to 25% of management fee depending on the engagement.
But that’s there because there’s a lot more work involved. If someone’s spending like a thousand dollars a month in Google Ads, it requires a lot less babysitting than someone that’s spending 5,000, 10,000 more than that if they’re doing a good job for you.
So I would just say if you’re pricing out agencies and you’re not sure what to expect, don’t be surprised if that’s kind of the price tag you see. You’re totally in your right to ask, "Okay, what are you doing within that? Are you checking on my account weekly? What optimization is being done? Are you improving my landing pages? Are you improving my ad copy? What’s going on in there?"
But any agency that is really being a good steward of your money is going to have weekly tasks that they’re completing in your Google Ads account to account for why you have that management fee.
And anyone who’s listening that’s maybe tried to manage their own Google Ads in the past or maybe gotten a cheap version of that probably understands that there’s a whole lot going on under the hood. It’s not like LSA that you can kind of turn it on and you only have a couple of levers you can pull. There are so many different ways you can skin the Google Ads cat.
And then on top of it, Google is constantly releasing new ad opportunities like Performance Max is a big one right now, Demand Gen. They’re really pushing AI, so there’s new products all the time and if you don’t know what you’re doing, you could just be flushing money down the drain. So that’s why you’re paying for that fee.
Devon Hayes:
So okay. How do you know? Because then I’m putting myself in a contractor’s shoes and I say, okay, I’m paying this company and, all right, now I’m hearing this podcast, I’m going to go ask some smart questions. What if I say, like what are you doing for my management fee? And they’re like, "You know, we’re managing the account?"
Are there I guess some telltale signs or like three very direct questions that have an obvious answer? Or is there like how, as a contractor, like what should they look for to know that work is actually being performed? And just as a gut check, you hope you’re working with someone you trust, but how do you check? Like what’s something they can look at? Yeah.
Amanda Joyce:
First thing, we’ve always said this on our profile, you should always own your account. So if you are paying someone to manage Google Ads free and you can’t log into it, you need to ask right now to get access to it. It’s your money.
Years ago, some agencies would manage your account and then if you left them, they kept it. Most agencies don’t do that, but the next things I’m going to tell you require you having access to your account so that’s why I’m saying.
So I would say make sure you do have, you’re able to log in. Even if you have read-only access so you can’t make changes, you should be able to log into your Google Ads account.
So if you can log in and there’s just a change history, you can literally go in and just look for the last 30 days, what the change history is in your account.
And if things are going really well, there might not be a lot of changes. You might be happy with your cost per contact and things. And in some cases, they’re just going in and they’ve got you in such a good spot that they are checking under the hood and there’s not a lot of changes that have to be made.
But if your cost per leads all over the place, stuff still seems up in the air, you’re not really comfortable with how the program is being managed, the change history is the easiest way to be like, okay, why’d they do this?
And another smart question you could even ask them is like how many negative keywords were added to my account? It’s just an easy metric that they should be able to tell you. There’s an area they can go in and look at your search terms so it’s actually what you’re being served for in Google or it’s not. Because you can load a bunch of keywords in there and then Google decides what… There’s a standard deviation from those keywords that you’re actually served for.
So you can just go in there and look at which search terms you were served for. And if they’re doing a good job of managing your account, they’re just in there adding negatives on a regular basis to get rid of wastes.
So those are really basic things you don’t have to know much and you could say you could look at your own change history. You can ask how many negative keywords were added in your account the last 30 days.
Devon Hayes:
Beautiful.
And what about, you mentioned cost per lead and I know that that fluctuates based on competition, based on seasonality. What would be something like, I’m a business owner and cost per lead is reported to me every month. What are some red flags? Obviously, we can’t control maybe the competition or your quality score, what that cost per lead is.
But if I’m a business owner and you report this to me, what would be a sign that maybe I need to take a look at my sales process or maybe something internally is not working and my marketing agency is getting me the leads, but because my sales team is not converting them, that cost per lead is going up or is that… I mean, is that fair to say? Is that how it works?
Amanda Joyce:
Yeah.
Devon Hayes:
Maybe, maybe not.
Amanda Joyce:
That’s a great question. One thing I would really shy away from or ask more questions around, if you have an agency who’s giving you an automated report every month and there’s no discussion around the actual leads that can be associated with the number of contacts or conversions they’re reporting to you, you need to do more due diligence. And in most cases, you probably just have to ask for a little more transparency, and they’ll give it to you.
I’m working on paid media reports right now and I’m sending things out to a lot of our clients and I’m maybe linking to an automated dashboard, but I’m also sending them a short up true cost per lead. Because a lot of times if we go listen to the real calls, some of them are hang-ups, someone calling to pay a bill. That does not count as a lead. It should not be pulling down your cost per conversion. Sometimes it’s total garbage. Like you can tell it’s a fake email address without even ever having to try to email them, you know?
And so cleaning those out and then really knowing, okay, how many actual potential leads did you get that month is really what that cost per lead should be. It should not just be like how many times did your conversion pixel and Google Analytics fire this month because it’s going to be dramatically higher than your true leads.
And then you can take that list, go look in your CRM, take it into your next sales meeting, chat through it, say, guys, let’s talk about these.
And you should be consistently grading them. I’m always asking our clients to do that because that makes me better. If I just figure out that, yeah, this one campaign looks like it’s killing it, but every month they come back to me and tell me they were all junk, I’m going to stop running that campaign.
Even if it made my cost lead look good, it’s not doing the client any good at the end of the day, unless we know that they’re at least booking an inspection or booking a consultation and ideally at least are in line with the company’s average close rates for all of their different marketing efforts.
Devon Hayes:
That’s really, really solid advice. Instead of just looking at the numbers and be like, okay, great. Taking it back to the sales team and saying, okay, they did drive a lot of leads, but what was the quality? Did they not convert? Were they tire-kickers? Was now not the right time or you’re finding from this one lead source they convert almost instantly? What’s that landing page age?
Yeah, because I think a lot of business owners, it’s easy to sit in the chair and look at the data and make assumptions, but having a conversation with the sales team goes a long way, and then sharing that information with your paid media manager is huge.
It’s a really smart business move that I think sometimes gets skipped because you’re paying for a service so maybe you don’t think you need to check in. I guess we’ve seen all kinds with our agency, some owners who are on it, and then some who are like, I’ll look in a quarter or two and see how they’re doing and…
Amanda Joyce:
Yeah. And I think a lot of times when we start being so transparent with them, then they start asking a lot more questions and maybe their previous agency just sent them that automated report. And then I can look at it and even say like, based upon, I wasn’t even here at the time, and I can tell you that most of these were phone calls that lasted less than 70 seconds. I’m going to go ahead and say, you got to assume most of these weren’t good leads, you know?
Then once we start asking those questions, it becomes second nature, too, for them to chat with their team internally and start giving us that feedback. And I love it because like you said, then I’ll know maybe that one landing page is killing it. We need to go change all the other landing pages to flow more like that one or maybe it’s not working and we need to get away from it.
And that’s the true measure is the quality of the end result of the end lead, way more than like how many times that form was filled out. Like let’s talk about how many times that form led to a closed job.
Devon Hayes:
That’s the good stuff. That’s the meaty stuff right there.
Amanda Joyce:
Yeah.
Devon Hayes:
Well, that’s perfect. Yeah. I think that really covers it. It’s not just to set it and forget it if the job is being done right. If it is set it and forget it, then you’re probably paying a thousand bucks a month maybe, 15 bucks a month for paid media management, like it’s…
Amanda Joyce:
Yeah. And if you are, as long as if you can reach out to whoever is managing it and say like help me figure this out. We always use landing pages with a dedicated landing page form, so it’s real easy to just tell what leads came out of our landing pages. That’s kind of industry best practice. So that’s hopefully what your agency’s doing for you. So it should be pretty easy to determine it.
There’s also ways of tracking codes if they’re not using landing pages to still tell which leads came from your paid media efforts and just start there, start grading them.
And maybe you’re getting a real good deal. Maybe they’re not charging you a percentage of ad spend, they’re charging you a flat fee and you can follow those all the way down the buyer journey and prove ROI on that, [inaudible 00:12:09], keep going with it.
And if not, it might be time to start reassessing. Saving a little bit of money on the management fee, but not having the right end result is not doing you any favors as a business owner.
Devon Hayes:
Yeah. Yeah, that’s a golden nugget right there if I ever heard one.
And then is it common practice, I guess I know the answer, but maybe people listening don’t, is it common practice to charge per ad platform or do you charge for the total all-in ad spend?
Amanda Joyce:
Good question. Depends on the agency. For us, with a lot of our clients that come in at a CMO level, we end up just doing percentage of ad spend above a certain amount.
But if people are hiring us and not paying for a full CMO suite, we charge per platform because it’s a lot of work, you know? Like I can take my learnings from Google Ads and go put them into Bing, but it’s a whole ‘nother system over there. And I mean, there’s an easy button you can push where it just automates it, but that’s, again, where you can run into like you can quickly waste a whole lot of money. So if it’s being done properly, in most cases you’re going to pay per ad platform.
But again, you want to make sure you’re getting the very most out of that money. I’d rather be on two ad platforms that are killing it for me than five that are all being kind of half-managed and I don’t really know at the end of the day what kind of return I’m getting on those leads.
Devon Hayes:
Okay, so you bring up a really good point about your return on investment within paid media. Every market is different, every service is different, every campaign is different, and I know that in paid media campaigns we get smarter with time.
How long is a good enough like, I guess, sample size of data to know that, okay, this landing page or this CTA is or is not working? Like what would you recommend business owners just batten down the hatches for how long before they determine something is not working for certain?
Amanda Joyce:
Yeah. I mean, I would give it 90 days. You also need to think about it. If you start testing, if it’s your slow season from December to February, don’t test it in those 90 days and then say it doesn’t work. Like if you’re willing to just see like what can we get in this slow period, but you should probably test it at a time that you know there’s a real demand in your marketplace for it and give it 90 days.
But also make sure you’re talking to your agency regularly. If you’re spending a good wedge that you really consider a gamble as an agency, I mean, company owner, and you need this money to have a return or it’s really going to hurt you, you should definitely be getting monthly reports. You should be assessing those leads. If you stay on top of it, then once it’s off the ground and running, you can have a system in place where maybe your agency’s just emailing the leads over to one of your sales leaders and they’re just checking it.
But at the beginning when really look at it with a microscope, and then once you’ve got a level of trust and stuff’s working, great.
But keep in mind the landing page could be killing it this year and it’ll go stale on a year, a year and a half. So it does need to keep being tested.
And something that’s killing it this year… The problem with Google Ads specifically, and even LSA, as more and more people get into the marketplace, it gets saturated.
Most roofers learned that years ago. It used to be like the place where it was like shooting fish in a barrel to run like roofing contractor near me in your market, and now it’s like plus a hundred dollars in some markets for the single click. So what once worked doesn’t anymore.
So again, you can’t just trust the company that’s going to like turn it on and kick their feet up and they’re going to just invoice you every month and you have an automated report and you don’t even know if they’re looking at it. What’s working now, a year from now might really no longer be working, and at that point, you’re just letting money [inaudible 00:16:03].
So just like it’s not set and forget it for the agency, unfortunately, as the business owner, it is not set it and forget it for you, either. Even if you’re just quarterly being like, okay, give me the quick and dirty, give me 15 minutes of your time. I don’t need an MBA, but tell me what’s going on, that due diligence will go a really long way for you.
Devon Hayes:
Excellent, excellent. I think you’ve covered all my burning questions about paid media.
I guess we’ll leave you guys with this one. If you could give one piece of advice to business owners who are starting down maybe the Google Ads journey, what would you advise them?
Amanda Joyce:
I would advise them if you offer multiple services, you need to look at the service that has your strongest margins, that you’ve got some room for error to start testing in first.
Don’t just start. If you’re an exterior contractor, maybe don’t just out the gate start bidding on every single service you offer. Pick one that, yeah, that you know can turn the jobs around quickly. You know there’s a really good return on them. Really figure out how your landing pages are working in that market and get them killing it, and then you could start adding sighting and whatever else.
I’ll also give you the hot tip that in most markets we’re currently finding that I’m getting a year from now, this probably won’t be the case, but right now, decks is where it’s at. If you are an exterior contractor running ads, I would suggest starting on decks. It’s not oversaturated like roofing and some of the other exterior services.
Devon Hayes:
Boom. You heard it here first.
Well, thank you so much for all of your insights and sharing that with everyone. I mean, I learned a lot every time I talk to you, but-
Amanda Joyce:
Yeah, absolutely.
Devon Hayes:
… beautiful insights.
Amanda Joyce:
Thanks for the killer interview.
Devon Hayes:
Yes. So if you guys found this helpful, think somebody else might, please be sure to share with them, and we’ll see you next time.
Amanda Joyce:
That was today’s trade secret. Thanks for listening.
Devon Hayes:
Did you find this helpful? We’re just getting started.
Amanda Joyce:
Subscribe, and don’t miss our next reveal.
Devon Hayes:
Until next time.