Are flat-fee Automotive Pay-Per-Click providers saving you money?
There are many reasons to have concerns over a traditional pay-per-click vendor’s billing model charging a percentage of spend. Often, there are economies of scale that award a vendors performance higher at greater spend. Usually, the time setting up an accoount/campaign is the largest expense for your vendor. Imagine you are trying to bid on the term “used cars near me”. You are able to get 1000 clicks at $1 Cost per click before running out of budget. if you spend $1000 at 30%, the vendor would take a $300 fee. However, they ran that account up to $10 Cost per Click, those same 1000 clicks would cost $10,000 in spend. Your PPC vendor would make $3000 for the same sunk cost, and you have only gotten the same 1000 clicks! Moreover, while accounts need to perform well enough to not cause a termination of the vendor relationship, a highly optimized account running at a low cost-per-action can be far more work for a vendor, and result in yielding them less in fees. A difficult position to be sure.
Surely then, you should only talk to flat fee providers then, right?
Like all things in Automotive marketing…it depends!
Luckily, you can determine if you are actually saving money vs a provider who charges a percentage of spend. You simply need to add up all the costs associated with that vendor, and separate fees from actual ad spend.
Then we simply divide our fee by total spend, and convert to a %.
Like all things we encourage thinking better about, we have a free google sheet that can help you calculate your fees quickly.
As always, good PPC needs to be monitored closely no matter it’s place in your strategy. In most instances, PPC can have a place for dynamic inventory if properly configured, and as a stop-gap to rank for new model terms until your search engine optimization strategy works to rank you for those terms.
As always, stay vigilant as we march ever forward towards vendor accountability.