#general-chat

Agency fees can be pretty variable. Usually the fee is a % of media spend between 20-30%. You might find some smaller agencies doing 15% or around there. There is also typically a minimum fee. So the cost structure would be something like minimum of $1k in management fees OR 25% of media spend, whichever is greater.

Some agencies will work out deals where the compensation is partially performance based. Where there is a minimum fee but their revenue increases based on your performance goals. That is almost always negotiated on a case by case and could be % of revenue, ROAS targets. Etc.

I’m sure there are probably other structures out there, but minimum fee or % of spend is the most common one I’ve found. That % of spend is highly variable.

Always pay flat fee. Happy to help you out. Feel free to send me a message

Now that I think of, every good agency I’ve worked with has been a % of spend. My favorite partners were a % (what I thought was very reasonable/low), but with a minimum. Spending $10k a month can be harder work for them than spending $100k. If you want to DM me what you’re spending and what you’re paying I can tell you if I think it’s fair! I’ve never seen as high as 20-30% of spend. I’ve even switched agencies because 6.5% was too high.

@alexa natanson Where was that agency based? I’ve never seen a USA agency lower than 15%.

All these are US. I’m thinking one with a 5% fee, one with 6.5%. Spends were high on all these accounts though - so they were doing well. None of these included creative

Ah, yeah. If you’re spending $100k/month, then 5-10% makes sense. But for accounts spending $10k per month, you’re probably paying 20-30%

For sure! With all of them there are minimums - if they even take a client spending $10k.

The more I think about it, the more I believe that working with people you trust is worth any $$$. I’ve audited 2 brands in the last week alone where one had 100% of spend on brand (unknowingly) and the other had 90% of spend driving to ancillary products with a terrible AOV. So if you trust the people running your ads and feel confident they are working on behalf of your best interest, I wouldn’t worry about a percent or 5.

If the ad agency doesn't produce ads if they only do media buying...you should hire a media buyer freelancer instead. this specific job function is now mostly automated and can easily being handled by one person

I run my agency on a flat fee/retainer model + a % of extra gross profit our clients generate. % of adspend in my opinion doesn’t hold people accountable to getting results since their main goal is to spend more - their second goal is to make sure the economics of their ads make sense.

Seen it probably 100 times this last month in accounts that we audited. Scaling spend from $100k/m to $250k/m with no regard for profitability just chasing a high CTR.

The way I’ve structured it I believe my entire organization’s motivation is aligned with the client where everyone gets their “salary” but as we help brands scale and they start to hit bigger and higher numbers they’ll get compensated a bonus which is 5-10% of the EXTRA gross profit we generated that account (excluding what their average gross profit used to be).

To be fair though we are also testing 3-6 new ad concepts per week for clients so that’s where the majority of the performance really comes form not the ad management itself 👍