In the wild west of digital marketing, pricing digital marketing services has not standardized yet and it’s all over the map. Unfortunately, the pool of digital marketing talent is all over the map too; some good, some bad and some just downright ugly. Since digital marketing is best measured as a combination of cost and performance, it’s best to evaluate digital marketing agencies in the same way in order to arrive at value. Look at their qualifications, awards and longevity in the business. Find out who you will be working with on a daily basis and how frequently the account will be optimized and reported. An agency with all their ducks in a row is worth more because they are more likely to deliver better performance than a less capable firm.

Here are three pricing factors to consider when evaluating digital marketing agencies like AdEdge and here’s how we fit in to this.

1) How much does it cost in general to work with an agency? An ethical digital marketing agency like AdEdge Digital Marketing will charge according to the amount of time they expect to spend on an account multiplied by an hourly rate that generates a reasonable profit after all expenses are covered. Some agencies charge as much as they can, and others charge as much as they can while doing as little as they can. In a competitive environment like digital marketing, the AdEdge philosophy on pricing is to provide as much value as possible. That means providing both reasonable prices and expertise that delivers high performance. Why not just charge as much as possible? That strategy may make for a temporary win but it’s not a good long-term, win-win strategy. Charging lean fees gives our clients the best possible return on their investment, it insulates us from competition, and it makes it more likely that our clients will stick with us for the long haul.

2) How much does a digital marketing campaign cost? Most people don’t like hearing responses like “it depends,” but sometimes it really does depend. Being in its infancy, no standard model has evolved yet on pricing digital marketing campaigns, except at the very high end with annual budgets in the seven-figure range, where clients can expect to pay agencies between 12% and 17% of ad spend. At lower investment levels, these numbers are higher and many firms have minimum monthly fees of $250 to $500, or more, in addition to ad spend. Or you could be so unlucky as to work with an agency that gives you one lump number, ad spend and agency fee included. You should never do this because with a single-fee structure, you generally don’t know how much of your budget is being spent on media (advertising) vs. the agency fee. Taking over accounts from other agencies, we sometimes see this and are often astonished to find fees that far exceed media spend. At AdEdge, we don’t charge minimum monthly fees because every case is different. Some campaigns (single-product or service campaigns, for example) are quite simple to manage and therefore, require a lower build fee. Others are more complex and involved. Our fees are calculated based on a combination of campaign complexity and ad spend. Many agencies like AdEdge charge an initial fee to research, build, test and launch a campaign. While these build fees vary, ours is a minimum of $500 per platform, a platform being Google Paid Search, Google Banner, Facebook, etc. Discounts come into play when we build multiple platforms simultaneously.

3) How much should I spend on my digital marketing effort? This is one of the most common questions we get, and it’s one of the hardest to answer. In a 2017 article, entrepreneur.com recommended small and medium-sized businesses (SMBs) spend between 10% and 12% of their gross revenue on marketing. Of that marketing budget, they recommended 35% to be allocated towards digital marketing. Being 2019 and based on client performance, we are currently recommending an allocation of at least 60% of marketing budget on digital marketing. These, of course, are just guidelines. A brand new digital marketing effort can (and sometimes should) start with a lighter level of spend, or even a “soft launch” until campaigns are performing at an optimal level. Many small-business owners make decisions about advertising more subjectively, and that’s fine. It often comes down to what level of investment you are comfortable with, especially if digital marketing is a new channel for you that you are treating as a test.

Here at AdEdge, we work with a wide range of companies, some with small, simple campaigns and others with very large, complex campaigns. If you would like a digital marketing evaluation and a recommended plan, feel free to schedule some time to talk, email [email protected] or call 203-682-4585.