PPC Agency Fees in London: Retainer, Percentage or Performance?

How a PPC agency charges you changes what it does. That is not cynicism, it is incentives, and understanding the three common models is worth more than comparing headline prices.

Flat monthly retainer

A fixed fee regardless of spend. Predictable for budgeting, and it keeps the agency indifferent to how much you spend - they have no reason to push your budget up.

The weakness is attention. A small account and a large one may pay similar fees, and guess which gets the senior hours. Ask how many hours a month your fee buys and who provides them.

Percentage of ad spend

Usually ten to twenty per cent of what you spend. It scales with workload, which is fair in principle, since larger accounts genuinely take longer.

The flaw is obvious once stated: the agency earns more when you spend more, whether or not spending more is right. If you choose this model, agree in writing what triggers a budget increase - a cost-per-lead threshold, not a conversation.

Performance-based

A fee tied to leads or revenue. Attractive, and harder than it looks.

Defining a qualifying lead is where this falls apart. Is a form fill a lead if the person was never going to buy? Who counts them? Agencies paid per lead will optimise for cheap leads, which are not the same as good ones. It can work, but only with a definition both sides accept in advance and a feedback loop from your sales team.

Which should you choose?

For most London businesses spending under about ten thousand pounds a month, a flat retainer with a clear scope is the simplest and least distorted.

Above that, a percentage can be fair if it comes with agreed thresholds. Performance models suit businesses with a clean, measurable sale and the data discipline to support them, which is fewer companies than claim it.

When is a fee too high?

When it is a large share of total spend. Paying two thousand a month to manage three thousand of spend rarely makes sense - the account is not complicated enough to need it, and the same money in media would do more.

As a rough test: if the management fee exceeds about a quarter of your spend, ask what is being done that justifies it. There may be a good answer, such as heavy creative or landing page work. There may not be.

What is the agency actually doing each month?

Worth knowing, because it is what you are paying for. A properly run account gets weekly search-term review and negative keywords, bid and budget adjustments, ad copy testing, and a check that conversions are still recording correctly. Monthly it gets structural work: new campaigns or ad groups, landing page recommendations, audience and remarketing changes, and the report.

If an agency cannot describe its week, the account is probably on automated bidding with occasional glances - which can work, but is not worth a senior fee.

How do you tell a good agency from a busy one?

Ask what they stopped doing last month. Good accounts have things switched off - campaigns paused, keywords removed, audiences excluded - because discipline is most of the job. An agency that only ever adds is spending your budget to look active.

Then ask what they would do if you cut the budget by half. The answer reveals whether they know which parts of the account actually produce the leads.

Should the agency build your landing pages?

Often yes, because the page is half of the result and the fastest thing they can change. But settle ownership first: pages built on the agency's own platform or subdomain disappear when the relationship does, taking the conversion data with them.

Built on your domain, in your CMS, with you owning the files - that is the arrangement that leaves you with an asset rather than a rental.

What should be in the contract?

• The ad account stays in your name, with spend billed directly by Google.
• Scope: what is reviewed weekly, what monthly, and what is extra.
• Reporting: cost per qualified lead, not impressions.
• Notice period: thirty days is normal, six months is not.
• Landing pages: who builds and owns them.

The first line matters most. If the agency owns the account, your history leaves with them - and in paid search, history is what makes an account cheaper to run.

How we structure this is on the Google Ads page, and how we work with UK clients on the UK page.