Your agency makes more money when you spend more. That's the incentive structure.
Most PPC agencies charge a percentage of ad spend. 10%, 15%, sometimes 20%. The logic seems fair: as spend grows, so does the work.
But this pricing model creates a fundamental conflict of interest that rarely gets discussed.
The Incentive Problem
When an agency earns more by increasing your spend, their financial interest and your commercial interest diverge.
Consider two scenarios:
Scenario A: You're spending £50k/month at 3x ROAS. The agency recommends scaling to £100k/month. ROAS drops to 2.5x, but hey, you're getting more revenue. Their fee doubles.
Scenario B: The agency identifies £15k/month in wasted spend. Cutting it would improve ROAS to 4x but reduce their fee by 30%.
Which recommendation do you think happens more often?
What Gets Optimised
Percentage-based pricing optimises for:
- Spend growth, not profit growth
- Campaign expansion, not efficiency
- Activity, not outcomes
The agency looks busy. Reports show more spend, more conversions, more revenue. But the efficiency questions get glossed over because efficiency means less fee.
The Alternative Isn't Free
Some agencies respond to this criticism by offering flat fees. But flat fees create their own problem: no relationship between effort and outcome.
The truth is, pricing structures matter less than alignment. The question isn't "what do you charge?" It's "what are you actually optimising for?"
How We Think About It
We charge based on account complexity and management scope, not spend level. When we identify waste, cutting it doesn't hurt us. When we recommend scaling, it's because the economics support it, not because our fee depends on it.
This isn't about being noble. It's about removing the incentive to give bad advice.
Questions to Ask Your Agency
Before your next performance review, ask:
- If we cut spend by 20%, what happens to your fee?
- When was the last time you recommended spending less?
- How do you define success: revenue growth or profit growth?
The answers will tell you everything about whose interests they're serving.
If you're spending £10k+ per month and questioning whether your budget is working as hard as it should, let's talk. No percentage of your spend involved.