What Paid Social Agencies & Ad Buyers Charge: A Guide
There are a handful of types and amounts of fees ad buying agencies, teams, and freelancers charge. None are a one-size-fits-all method. None are the only right answer nor the only wrong answer.
Check out these types of fee structures, offerings, options, and conversations to have with brands/clients to decide what’s best for you, your team, and your client. Also don’t be afraid to change fees after working with a client for a certain amount of time, or restructuring as scope of work changes.
These conversations were originally posted in the Foxwell Founders Membership. Check out our elite community of 400+ expert ad buyers from around the world here.
What are the types of fee structures you can charge clients?
Retainer only: A flat dollar amount a client pays an ad buyer or agency, regardless of ad spend or time spent managing the account, etc.
The most stable and consistent of types of fees
Percent of spend only: A percentage of ad spend, charged for the previous month regardless of revenue made or time spent in the account, etc.
The most volatile and inconsistent of types of fees
Retainer plus percentage of spend: A combination of the two aforementioned types of fees; There is a set base rate that the ad buyer/agency is paid regardless of spend and an additional fee charged as a percent of spend. Some fee structures are base retainer plus percent of spend OR can be a base retainer fee that switches to a percent of spend depending on the amount of spend, whichever is higher.
This is more stable than percent of spend only but has more room for growth in heavy seasons than retainer only. It also is harder for the client and agency to budget and account for, as the amount changes monthly
Another alternative to this is a flat retainer OR percentage of ad spend, whichever is greater (i.e. “$3k/mo or 10% of the ad spend, whichever is greater)
Performance based: This fee is tied to the revenue and profit driven for the company as opposed to being a flat fee or dependent on spend.
Keep in mind that for performance-based fee structures, platform attribution is tricky and likely not fully correct in-platform or on a third-party software.
Alternatives to performance-based DUE TO the lack of accurate attribution for performance of specific channels based fees, could switch to percent of total profit, percent of all managed channels ad spend, or flat retainer fee.
Retainer plus performance-based (on blended ROAS/MER): A combination of a flat retainer only, regardless of ad spend, and a bonus structure based on total shop blended ROAS, i.e. percent of revenue OR profit if over X MER.
This provides the stability of a flat retainer, but the benefit of profitable seasons and the overall shop doing well. Downside is that the more spent on advertising, the more work that is put in, which generally decreases overall blended ROAS/MER, though total revenue increases.
The higher the profit is the higher the bonus percentage is
Example:
$500k/month ad spend: $37.5k fee (media buying only, no creatives)
If blended ROAS = 4.5 or higher, client pays a 10% profit share fee
Fee Structures: Am I charging the right amount? What’s a fair price to charge?
It is common to see capped fees if over X amount of spend, especially for high-spend accounts (over ~$750k-$1m/mo), a flat fee is charged
With a min $100k ad spend:
$7k/mo base rate PLUS
7% of ad spend up to $250k PLUS
5% of ad spend over $250k PLUS
3% of ad spend above $500,000
No cap on commission
For this agency, this fee includes managing paid social for Meta, Google, Amazon, Pinterest, Snapchat, Reddit, and Bing Ads, as well as creative/design work.
10% for the first 100k and then 8% for ad spend $100,001 and above
Some prefer a fixed retainer for anything above X amount, though some ad buyers and agencies prefer percent of spend model, AND shy away from performance based
For a more full service ad buying agency (paid social, organic social, email/SMS, branding/messaging, one-off campaigns, and various creative services)
15% of ad spend up to $200k
13% of ad spend between 200k-300k
11% of ad spend between 300k to 400k
I've also found that if the service is media buying only, $25k/mo is the trigger point for bringing in-house, but if it’s also creative and strategy and general marketing support, it’s a much bigger in-house cost and more hires to fully replace the agency
Another option: flat fee plus percent of revenue:
$15k flat fee/mo + 2.8% of revenue, locked in for a year.
Especially with US clients, charging more than 10% of ad spend is not generally seen anymore. Many clients/shops/brands who reach $20-25k agency fee per month start to think about bringing an ad buyer in-house full-time
Could charge a base fee max and charge for "creative services" separately
Keep in mind that spend structures can also guide and keep longterm partnerships and word of mouth referrals from current clients to future/potential clients
What to do when a client pushes back on the fee being too high:
Know your worth and the going rate of ad buying. This is what this blog is for!
Eventually it might make more sense for them to bring ad buying in-house. Pushback to that:
With a freelancer they don’t have to pay benefits.
With a freelancer they get someone that benefits from seeing things elsewhere (unless they’re in house and a member of the Foxwell Founders group :) )
With a freelancer, generally you might be able to have a swiss-knife that can do more, but not always.
Finding and training a qualified person that can do paid social is going to cost way more and take much longer than you expect it will.
A well-seasoned colleague said in response to this: my pushback on price in general is to focus on the value. How much money will I be adding to your organization with my ads buying? If you look at that the fee usually looks pretty small. And then in terms of agency v in house, there are a couple of things i'd focus on. First and foremost, it's having a view on lots of other ad accounts so you can see general trends and get ideas from what you see working elsewhere. Then also a fb ads person for example lives and breathes fb ads, spends time in places like the Foxwell Founders group and different slack and fb groups interfacing with other buyers and staying on top of everything fb. maybe an in house person will as well, but typically when I ran an in house marketing team at my last job we didn't have specialists by platform...our team handled SEO, Google ads, FB ads, Twitter ads (really!!) etc, plus reports to management, handling stakeholders within the business, etc etc. there was barely enough time to do the work let along immerse yourself in the world of ane one platform to become a true expert. Hiring can also be a process, so it's generally not a quick fix kind of thing.
Remember that it is normal and acceptable to increase rates as an ad buyer/agency ‘proves’ themselves in market. Depending on where you are at in the lifecycle of your agency/service, you can get points on the board and it will allow you to charge more in the future.
For $50K in spend and a standard 10% of ad spend fee is $5K/mo to the ad buyer/agency ($60K annually), which is a very reasonable salary for an on-team hire — basically the salary for a college person, just fresh out of college that doesn’t know what they’re doing
How and when to invoice:
When charging percent of spend, charge the minimum on day 1 of the relationship and then the difference on day 30 and then day 60 has just the total amount for month 2.
Invoice on the first of the month for the upcoming month (avoids issues at the end of relationships with getting paid) but we base it on the trailing month of spend. So if we started on November first, we would bill them for 10% of their October ad spend. We didn't manage them in October, but we look at the trailing month. It avoids situations where you're reconciling on the next months invoices or shoving more budget to hit your number.
With this structure, you could run into situations where clients could say, "you're charging us for spend you didn't manage" but it's not actually charging for spend, it's just a reference for how much to charge.