The single most useful document on this subject is published by Google, not by an agency. Its guide to whether you need an SEO and how to hire one is short, free of sales language, and the warning signs it lists apply just as well to paid media and web development.
Read that first. This article covers what it does not: what a retainer should contain, and how to work out whether a price is reasonable.
The questions that separate agencies
Google suggests asking for examples of previous work and success stories, what results to expect and in what timeframe, and how success is measured. Four more are worth adding:
“What is our break-even ROAS?”
A good answer asks for your gross margin, because the number cannot be produced without it. An answer quoting an industry benchmark means they are not thinking about your business. Our article on what counts as a good ROAS explains why.
“Who actually does the work?”
Pitched by a senior person, delivered by a junior, is the oldest pattern in the industry. Ask for the name of the person who will be in your account, and ask to meet them.
“What happens if I leave?”
Ad accounts, analytics, Search Console, the website and the domain should be owned by you, with the agency added as a user. An agency that owns your ad account owns your history. This is not about trust; it is about what happens two years from now.
“What would you not do for us?”
Anyone who says everything you asked about is a great idea is selling hours. An agency worth hiring will say a channel is wrong for you, or that your site has to be fixed before media spend makes sense.
The warning signs
Google’s list starts with the big one: nobody can guarantee a number one ranking, and a “special relationship” with Google does not exist. Beyond that:
- Vague deliverables. “Ongoing optimisation” is not a deliverable. Ask what arrives, how often, and in what form.
- Reports that only contain good news. Every month has something that did not work. A report without one is a report that is not being read carefully.
- Vanity metrics in the headline. Impressions, reach and “engagement” as the top line, with revenue further down or absent.
- Long lock-ins with no exit. Twelve months signed before anything is proven. Three months is reasonable for work that takes time to show; twelve with no break clause is a sales tactic.
- A fee that swallows the budget. Covered below.
- No questions about your margin. An agency that never asks what you make on a sale cannot tell profitable growth from expensive growth.
What a retainer should include
A monthly fee should buy work, access and reporting. Specifically:
- A named person who knows your account and answers your emails.
- Defined work — the channels managed, the creative produced, the number of landing pages or articles, whatever the scope actually is.
- Reporting you can read, showing revenue and cost per acquisition, not just platform metrics.
- A regular call where you can ask why something happened.
- Your own accounts, in your own name, with your own billing where you want it.
Ad spend normally sits outside the fee and is billed by the platform to you. Make sure you know which arrangement you are in before the first invoice.
Working out whether a price is fair
There is no standard rate, but there is a sanity check. Add the fee to the media spend and ask what the combined figure has to return.
Example. Fee $1,000 a month, media spend $2,000, gross margin 45%.
- Total monthly cost: $3,000
- Revenue needed to break even: $3,000 ÷ 0.45 = $6,667
- Required ROAS on media alone: $6,667 ÷ $2,000 = 3.33x
Without the fee, break-even would be 2.22x. The fee raises the bar by half again. That may be entirely worth it — a good agency should lift performance by more than that — but it should be a calculation, not an assumption. Run yours through the ROAS calculator, including the fee in the spend.
As a rough guide, a fee approaching or exceeding the media spend rarely works on small budgets. There is not enough media for expertise to make a difference large enough to cover it.
In-house, freelance or agency
| Works well when | Falls down when | |
|---|---|---|
| In-house | One channel matters and there is enough work for a full-time person | You need five specialisms and can afford one salary |
| Freelance | The scope is narrow and well defined | The work spans channels, or the person is unavailable |
| Agency | You need several specialisms and continuity | The fee is large against the spend, or the team is anonymous |
Frequently asked questions
How long before I can judge an agency?
Paid media: six to eight weeks, once conversion tracking is right and the learning period has passed. SEO: three to six months for leading indicators such as indexation, impressions and average position, longer for revenue. Judging SEO on month one revenue is judging the wrong thing.
Should I pay a percentage of ad spend?
It is common and it has an obvious conflict: the agency earns more when you spend more, whether or not spending more is right. A flat fee, or a fee with a performance component tied to profit rather than spend, removes it.
What if I have no idea whether the work is any good?
Ask for the reasoning behind one decision. “Why did you pause that keyword?” A good agency explains it in plain language in two minutes. That is more informative than any report.
Is a smaller agency riskier?
Different risk. Less depth if someone is ill, and usually the people who pitched are the people who deliver. At a large agency a small account is somebody’s least important account. Decide which risk matters more to you.
Where to go from here
Read Google’s guidance before you take any meeting. Then ask every agency, including us, what your break-even ROAS is and who will be in your account. You can work the first one out yourself in two minutes with our ROAS calculator, which makes it a useful test of whether the answer you get is serious. If you want ours, our team page names everyone and a free audit shows you how we think before anything is signed.
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