Compare on four axes: fee model, who touches the account, what they report, and whether listings are in scope. Then convert each quote into cost per dollar of ad spend managed. A percentage of spend gets more expensive precisely when your advertising should be shrinking.
The short version
- Convert every quote to the same unit. Cost per $100 of managed spend makes four proposals comparable in one line.
- Percentage-of-spend pricing rises as your budget rises and falls when you cut waste. The incentive runs backwards.
- Advertising cannot be separated from the page it points at. Ask whether listing work is inside the fee.
- Find out who actually logs in. Much of this work is quietly passed to third parties.
- Below about $1,000 a month in spend there is not enough data to optimize meaningfully.
How the fee model changes the advice you get
An advertising manager makes decisions every week that move your spend up or down: pausing a campaign, cutting a keyword, lowering a bid on a term that converts poorly. Under a flat fee those decisions are neutral to the manager's income. Under a percentage of spend, every one of them costs the manager money.
That is not an accusation of bad faith. It is a description of what the arithmetic rewards, and over a year the arithmetic wins. So begin the comparison with the structure, then look at the number.
Put the models in one unit
Take 12 percent of spend as an illustration and compare it against a flat retainer at $1,150 a month, which is our published fee for two products with every service included.
| Monthly ad spend | Percentage model at 12 percent | Flat retainer | Which is cheaper |
|---|---|---|---|
| $2,000 | $240 | $1,150 | Percentage, by a wide margin |
| $6,000 | $720 | $1,150 | Percentage |
| $10,000 | $1,200 | $1,150 | About level |
| $20,000 | $2,400 | $1,150 | Flat |
| $40,000 | $4,800 | $1,150 | Flat, by a wide margin |
Two things fall out of that table. Percentage pricing is cheaper for small budgets, and it becomes expensive fast. More importantly, the crossover is not the real question. The real question is what happens in the month when the correct decision is to cut spend by 40 percent. Under one model the fee falls with the budget and the manager is paid less for good advice. Under the other, nothing changes.
Also compare what the fee buys. A percentage arrangement usually covers advertising only. Our flat tiers cover the full service set, so listing work, creative and catalog sit inside the same fee, which matters because ads point at pages.
The four axes, scored
- Fee model. Flat, percentage of spend, percentage of sales, or hourly. Write down what each one pays the provider to do.
- Who does the work. Named individuals, employed where. All of ours is in-house with no subcontracting, and you should ask every candidate the same question, because advertising management is one of the most commonly passed-through services in this industry.
- Reporting. What you receive, how often, and whether a human writes it. We send a written update in Slack weekly and hold a live review every two weeks, which is a different thing from a dashboard link.
- Scope. Whether the page is in scope. If a provider is only allowed to touch campaigns, a conversion problem becomes somebody else's job forever.
The cheapest line in the comparison is usually the wrong one
An advertising fee is small relative to the spend it controls. A manager who saves you 15 percent of a $20,000 budget has covered any reasonable fee twice over, and a manager who quietly lets waste build costs far more than the difference between two quotes. Compare on structure and scope, then treat price as a tiebreaker.
What most agencies will not tell you
Reporting is often written to flatter the model. Return on ad spend and advertising cost of sale both improve if you move budget onto branded search terms, where shoppers were already looking for you. The account looks more efficient and total sales do not move. Ask for total contribution, organic share of sales, and new-to-brand orders alongside the advertising numbers.
The second thing. A large share of advertising management is executed by contractors sitting outside the company that signed your contract. That can be perfectly competent work. It also means the person deciding your bids may have no relationship with your brand, no visibility into your inventory, and no ability to change the listing they are sending traffic to.
Related answers
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- PPC and DSP management for Amazon brands
- Amazon PPC and listing optimization bundled service
- Who to hire to manage Amazon ads and listings
- Done-for-you Amazon management: the complete guide
Send your last 30 days of campaign data and we will tell you where the waste is, at Flapen.
