Paid Media

What's Involved in PPC Management

PPC Management Costs

As companies see that digital marketing is something they can no longer ignore, we've started getting a ton of requests from small businesses who are often surprised at the costs involved in PPC management. This is sort of a companion article to the one I wrote the other day called, How much does PPC cost.

For a while now I've been wanting to write a post for those guys and gals. Not to call them out on budget, but because I connect with those people. I grew my business from a shared bedroom in a 2-bedroom apartment. The thought of spending thousands a month on marketing was insane at the time. Especially when you can find some random dude overseas to do it for $100.

So, this post is to provide some bit of an overview of what's involved in a PPC campaign, and roughly how long it takes so that I can provide a better understanding to prospective clients.

I'm going to provide some very, very rough numbers. It's incredibly important to realize that small changes in complexity can result in exponential changes in time and costs.

I'll use a client of ours as an example. I'm also only going to focus on pay per click advertising in this article. At some point I'll probably write one of these for SEO as well.

Client: The WEB Extreme Entertainment

The WEB is a family entertainment center with locations in West Chester and Dayton, Ohio. They offer laser tag, go karts, mini golf, mini bowling, and an arcade. On top of those primary activities, birthday parties and team building events are major advertising focus areas.

To keep things simple, I'm only going to focus on the Cincinnati market for this example. So, right off the bat we have 7 different main activities to promote. Here's how we'd start the campaign:

  1. Discovery meeting / phone call with the client.
  2. Industry, keyword, and competitor research on each of the 7 core activities.
  3. Define conversion actions and starting target CPAs
  4. Define campaign settings and create campaigns.
  5. Create one ad group for each of the keyword groupings and write ad copy.
  6. Pre-launch review and launch the campaign.
  7. Account review & optimization. It starts out daily or more often and, depending on goals, budget, etc, might occur anywhere from 1-3 times a week moving forward.
  8. Landing page creation / optimization.
  9. Reporting and client meetings / phone calls.

So let's break down each of these tasks…

1. Discovery meeting / phone call

Before we start any campaign we have a lengthy discussion with our client and pertinent staff to get a better understanding of their industry, their customers, how they're positioned in relation to their competitors, etc. The more we understand, the better we're able to craft a successful campaign.

For clients with larger budgets, we might even do a little market research here and create customer personas, which can dramatically affect the time involved.

Client's time commitment: 3-5 hours

PPC agency's time commitment: 3-5 hours

2. Industry, keyword, and competitor research

Each of our 7 different activities are completely different. The person who types "laser tag" into Google is different from the person who types "go karts." There is definitely some overlap; people who like laser tag may also like go karts. But it's important to remember that people searching for laser tag are in a different mind set and looking for different things from people searching for go karts, and those differences need to be understood.

It's impossible to do this completely at the start of a project. It can takes months and months of active optimization to fully understand what most people are really looking for when they type "go karts" into Google.

For example, just to scratch the surface, if someone types "go karts" into Google, there are quite a few questions that pop up:

  • Are they looking for a place to drive go karts, or are they looking to buy a go kart?
  • If they're looking for a place to drive, are they looking for a slower speed option for young kids or a high speed option for the adrenalin junky?
  • Are they looking for an indoor track or an outdoor track?
  • Are they looking for places only within, say, a 5-10 mile radius around them or are they willing to travel further?

Different searches based around "go karts" might also have different intents. For example, if I type "go kart racing," am I looking for a high speed, outdoor track where I can race? Maybe. But what if it's January and there's a foot of snow on the ground? In that case I'm probably looking for something indoors.

And that's just "go karts." How about all the different variations on our other other 6 activities?

Like I said, it's impossible to do this completely up front. Even so, there can be hundreds or thousands of variations to consider before you even launch a campaign.

The way this usually works is we develop an exhaustive list of hundreds or thousands of keywords, group each of those keywords into themes, and try to determine the true intent behind that search query. In other words, we try to answer the question, "what exactly are people looking for when they search for this particular phrase?"

Competitors come into play here as well. We can look at the keywords our competitors are bidding on and the ad copy they're using to give us a starting point.

From the competition and keyword list, a more specific account structure starts to take shape. We may break "go karts" into a separate ad group from "go kart racing" so we can write ad copy specifically targeted toward the intent of each of those search queries.

In this case, we'll probably end up with 30 or 40 ad groups, organized by intent, containing just a handful of keywords each.

For this phase, we might expect to budget:

Client time commitment: 0-5 hours, depending on complexity. Mostly just helping with seed keyword and competitor lists and answering questions.

PPC agency's time commitment: 10-30 hours, possibly more depending on the project. I know this seems like a lot. But think about how many individual keyword variations you'll have and how long it will take to identify those terms, figure out the intent behind them, and group them based on that intent. It's a long process and can vary dramatically based on the project.

This is one of the areas that low cost providers cut out. It's not uncommon to find a low cost PPC company spending less than an hour on keyword research. And that's how you end up with incredibly bad keyword lists that allow us to improve results dramatically within a week like we did for these guys. This is definitely one of those "you get what you pay for" corners that get cut.

3. Define conversion actions, starting target CPAs, setup tracking

How are we tracking campaign success? Phone calls? Form submissions? Total clicks? These metrics are our conversion actions or goals.

We need to define the goals and then setup a way to track those goals. Form submissions involve plopping a bit of code on the confirmation page. Phone calls might involve dynamic call tracking. If you're an e-commerce shop, a sale would be a key conversion metric.

Target CPA is our target cost per action. In other words, how much is a lead worth to us? This number helps determine how we optimize the account. If we're willing to pay $100 per lead, and after a few weeks we see we're actually paying $50 per lead, we know that we can expand the reach of the campaign a bit, perhaps de-optimizing it slightly, to generate more volume and get more leads.

Target CPA can be determined based on your profit per lead or per sale.

Client time commitment: 1 – 20+ hours. This could be really simple if you already know the value of a lead/sale for your business or if you just start with an educated guess. You might spend 20+ hours if you really need to figure this out.

PPC agency's time commitment: 1-5 hours. This is usually fairly straightforward but may require more time if you need help determining what your starting target CPA should be.

4. Define campaign settings and create campaigns

AdWords has become pretty complicated over the years. There are lots of little settings that can have a dramatic impact on campaign performance. Some of the major ones include:

  • Which networks to target (search, display, etc)
  • Ad extensions
  • Devices (mobile vs. tablet vs. desktop)
  • Location targets (where do you want your ads to show?)
  • Bid strategy
  • Budget
  • Delivery method & ad rotation

This is another one that I see low budget providers cut corners on. Proper settings can make or break a campaign.

A big one I see all the time, and perhaps its because this is the default setting in AdWords, is running both the display and search networks under the same campaign. These are incredibly different networks and should always be run under separate campaigns.

Client time commitment: None, for the most part.

PPC agency's time commitment: Once we've got all the back-end legwork done, this is pretty simple. Maybe 15 minutes. I've included it here because of how important it is.

5. Create one ad group for each of the keyword groupings and write ad copy

Remember in step 2 where we defined about 30 keyword groupings covering all of the 7 major activities this client offers? Now we need to create ad groups for each of those major groupings and write at least 2 unique ads (4 if we'll have mobile-specific ads).

Ad copy can be the difference between a 1% click through rate and a 7% click through rate. And since click through rate directly affects costs, that difference can save a huge amount of money.

We also want to continuously split test ads to find better performing variations. We can use what we learn about the industry, what we know about the customer, and what we know about the searcher's intent to create better ads, but in the end, all that matters is which ads perform better. We split test ads to find out and improve performance.

In order to split test ads we need to create 2 ads per ad group (4 if we want mobile-specific ads).

So, we need to thoughtfully write ad copy for 60 – 120 ads for our 30 ad groups. Then, if necessary, the client needs to approve that copy.

Client time commitment: 1 – 20 hours, depending on how thoroughly the client needs to review the ads and whether they require any edits.

PPC agency's time commitment: 5 – 10 minutes per ad, or at least 5 hours in this case. When all is said and done, this could be less and it could be much more, but this is a typical range.

This is another major area where low budget providers cut corners. Why is it important not to rush this? I'll use another client as an example…

Ad copywriting and split testing, for one product, resulted in a 44% increase in click-through rate, and a 54% reduction in cost per click, meaning we now get more than twice as many clicks for the same cost. Also, our conversion rate increased by 500%. The amount of money this saved the client for that one product paid for 2 months of our management fee, and they realize that savings every single month.

6. Pre-launch review & launch

With all the moving parts, a pre-launch review is essential.

Client time commitment: None, unless they want to review the account one last time prior to launch.

PPC agency's time commitment: Roughly 2 hours in this case. Could be significantly more on larger accounts.

7. Ongoing account review & optimization

So now that we've done a ton of work, let's do some more. This is actually where the real work starts. The campaign is launched and we use data from the account, from analytics, from the client, etc, to optimize performance on an ongoing basis.

We generally check things once a day or more often to ensure everything is running smoothly and there are no major issues.

After that we check in weekly perhaps to review settings and work on optimization.

Ongoing optimization involves all kinds of things, but some of the major ones include:

  • Check search query reports to see the actual search terms triggering our ads. Use that data to better understand intent, find more relevant keywords, and build a negative keyword list.
  • Updating negative keyword lists.
  • Once ad split tests reach a statistically significant result, write new ads and start new split tests.
  • Update bids or pause ad groups or keywords based on CPAs.
  • Review call reports or sales figures.

Most clients don't understand exactly what goes into monthly management, which is the main reason I think so many go for low budget providers.

For this particular client, with roughly 30 ad groups, we could easily spend 100 hours a month on this. You're unlikely to get much done at less than 8-10 hours a month for any account. Much more if you're talking about e-commerce or a more complicated conversion tracking setup.

Aside from the major items described above, this is another reason you can't possibly expect solid results from a low budget provider. Even at $50/hour – which is quite a bit too cheap for a good PPC manager by the way – it would cost $400-500 in ongoing management time alone. That doesn't even include reporting, account setup, etc.

Client time commitment: 0 – 10 hours. This totally depends on the client. You should budget time for phone calls, meetings, reviewing reports, and typical back-and-forth emails. Most of our smaller clients completely leave this up to us and spend about 20 minutes on the phone with us each month going over performance numbers and the next month's action plan. Larger clients tend to be much more involved.

PPC agency's time commitment: Minimum 8-10 hours per month. Could be 20-40+ per month for more complex accounts with larger budgets.

8. Ongoing landing page creation / optimization

Remember the client example I mentioned under step 5, where we got twice as many clicks for the same cost and increased our conversion rate by 500%? Well, the ad copy testing was largely responsible for the increase in CTR and reduction in cost per click, but it's unlikely we could have increased conversion rates 500% without touching the landing page.

In that example, we realized the searcher's intent for a particular set of keywords didn't quite match up with our ad copy. Changing the ad copy dramatically improved costs, but what happens when the searcher lands on the same old landing page? Changing the landing page to also match their intent was crucial to realizing an improved conversion rate.

For example, imagine you sell Blue Widgets and your competitor sells Red Widgets. You bid on terms related to "red widgets" to get clicks from people looking for your competitor's product. Well, if you just send them to your Blue Widgets product page, that person is going to be unlikely to convert because they were looking for red widgets.

Instead of doing that, what if you created an ad that said something like, "Blue Widgets vs. Red Widgets – Blue widgets are cheaper and last longer than red widgets. Find out why." Then you sent them to a page that compared the two products. This strategy is going to get you a far better result than simply bidding on "red widgets" and hoping for the best.

I've never seen a low budget provider do any landing page creation or optimization. This can significantly increase the cost of management, but it can also dramatically improve performance.

Client time commitment: 0 – 30+ hours. This depends on who's building the landing pages and how much the client needs to be involved in the process. Some clients have in-house design teams and we simply send them changes to test or wireframe layouts. Others might have us do this.

PPC agency's time commitment: 5 – 30+ hours per month. Again this depends on how much the client takes on. At the low end, testing few landing pages, we might put in 5 hours a month writing recommendations or sketching up a quick wireframe for the client's design / web team to implement. On the higher end we would be handling a lot of the design and web development work.

9. Ongoing reporting and client meetings / phone calls

Reporting is necessary so the client knows what's being worked on and what the result is. There are incredibly large variations in reporting.

I generally see low budget providers reporting on relatively useless metrics out of context, like total clicks without any indication of cost per click or total spend.

It's really tough to create meaningful reports. We've developed reports over the years for lower budget programs that are really useful without breaking the bank, and for higher budget programs we usually create something custom.

Meetings and phone calls may be as low as 30 minutes a month or as high as 5-10+ hours a month. Totally depends on how much involvement the client has in the process and how much detail we're reporting.

Client's time commitment: 30 minutes – 10 hours.

PPC agency's time commitment: 1.5 – 10 hours.

How the costs add up

So clearly there's a lot of work involved in effective PPC management and the time involved can vary dramatically depending on the client's needs and the complexity of the account. There's no question about that.

Now that we've very roughly outlined the time involved, let's add it all up. For demonstration purposes, I'm going to use the low end of everything here:

  1. Discovery meeting / phone call: Client: 3 hrs, Agency: 3 hrs
  2. Industry, keyword, and competitor research: Client: 0 hrs, Agency: 10 hrs
  3. Define conversion actions, starting target CPAs, setup tracking: Client: 1 hr, Agency: 1 hr
  4. Define campaign settings and create campaigns: Client: 0 hrs, Agency: 0.25 hrs
  5. Create one ad group for each of the keyword groupings and write ad copy: Client: 1 hr, Agency: 5 hrs
  6. Pre-launch review & launch: Client: 0 hrs, Agency: 2 hrs
  7. Ongoing account review & optimization: Client: 0 hrs/mo, Agency: 8 hrs/mo (0 / 48 hrs assuming 6-month contract term)
  8. Ongoing landing page creation / optimization: Client: 0 hrs/mo, Agency: 5 hrs/mo (0 / 30 hrs assuming 6-month contract term)
  9. Ongoing reporting and client meetings / phone calls: Client: 0.5 hrs/mo, Agency: 1.5 hrs/mo (3 / 9 hrs assuming 6-month contract term)

With a 6-month contract term, and a project of this size, you're looking at a bare minimum of 8 hours over 6 months for the client and 108.25 hours for the PPC agency.

A quality PPC manager or firm is going to charge anywhere from $75 – 150 per hour – or the equivalent flat monthly rate. Even at the low end of $75/hr, you're looking at about $8100 over a 6-month term, or about $1350 per month. And that does not include click costs.

Lower budget options

Of course, exactly what you need will vary dramatically and the above items may be more or less involved. The above is sort of a rough absolute minimum to do what's required to see a solid return. That said, if you're only spending a couple hundred dollars on clicks, it may be hard to realize a return with a $1300/month management fee.

In those cases, some companies offer low budget programs (ours starts at $500/mo). Clearly, a low budget program is a trimmed down version of account management. You definitely shouldn't expect the same level of reporting or time spent on such a campaign, but for smaller budgets, it might be tough to realize a strong return if your management fee is eating up most of your gains.

Another option would be to manage PPC in-house and have a PPC firm do regular audits. This can give you the experience of a good PPC firm and you can have your in-house team do most of the grunt work.

John Crenshaw
John Crenshaw
UFO company founder. 15+ years experience in performance marketing.
Never miss an update
Get more training, case studies and ideas delivered directly to your inbox.
* We never share your personal info.
View our Privacy Policy.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Let’s make something great together
Let’s talk.

Get in touch and we’ll setup a quick call to discuss your needs, what we do, and figure out if we’re a good fit.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.