There is a widespread pricing model in the market: whoever manages your advertising takes a percentage of the ad budget. So the more you spend, the more they earn.
At first glance it looks fair — as if they are a partner in the volume. But look at it rationally and you will find a clear conflict of interest.
The conflict, simply
If the interest of whoever runs the campaign is tied to the size of the spend rather than to the result, then they have an interest in you spending more — even if the same result could be achieved for less.
And there does not have to be bad intent. The incentive alone shapes decisions: they will suggest raising the budget faster, and hesitate to suggest lowering it when that is the right call.
And a second problem: effort is not proportional
Managing a campaign with a ten-thousand budget and one with a hundred-thousand budget can take roughly the same time and effort.
So the percentage ties the price to something unrelated to the work done. And that harms both sides: the large client pays more than the service is worth, and the small client gets less attention.
The fairer alternatives
- A fixed monthly fee. The clearest and simplest: a price for a defined scope of work, whatever the budget.
- Pricing by scope. The number of campaigns, creative versions and reports.
- A fixed fee plus a performance bonus. A fixed part covering the work, and a part tied to an agreed goal.
- Project pricing. Suitable for launches and seasonal campaigns.
The first three are the most practical for small companies, because they make the cost predictable.
And the performance bonus?
A good idea with conditions. The measure has to be clear, measurable by both sides, and within the control of whoever is judged on it.
A fair example: a bonus on the number of serious enquiries below a certain cost. An unfair example: a bonus on sales when the selling is done by another team and reps reply after two days.
How do you assess the offer in front of you?
Ask three questions before you sign:
- How does the price change if I raise or lower the budget? If it rises automatically, ask why.
- What exactly is included in the fee? Number of campaigns, designs, reports and meetings.
- Who owns the ad account? The most important question and the one most often forgotten.
Account ownership is not a detail
The ad account must be in your company's name, with you granting access to whoever works with you.
If the account is in their name, then at separation you lose all campaign history, custom audiences and accumulated data — and that is a real asset you built with your money.
Transparency in spending
You have to see for yourself: how much of the budget was spent, on what, and what it produced. And that comes from owning the account and being able to log in at any time.
Any arrangement where you learn the numbers only from a report with no access to the source opens the door to problems — even if the other side is entirely honest.
Not everyone taking a percentage is bad
There are large agencies working on this model professionally with satisfied clients. The point is not an accusation, the point is understanding the incentives before you sign.
And if you choose this model, put controls on it: a budget ceiling, written approval for any increase, and agreed result indicators rather than spend reports alone.
In short
Pricing as a percentage of ad spend ties the other party's income to the size of your spending rather than your result, and creates a conflict of interest that does not need to be intentional to have an effect.
Clearer and fairer: a fixed fee for a defined scope, with a bonus on a measurable result if you like. And always keep the ad account in your own name.
This is part of a series on ads and SEO — which also covers when not to do digital marketing, and who the best marketer in the field is.