Are The SEM Agency Fees Reasonable?
The real professionals know that you can’t be an expert in everything. That’s why the best brands outsource their digital marketing to the real experts. A good SEM agency will plan and implement your digital marketing strategy from the ground up and will transform your brand’s online presence. But what about the costs? What are the usual SEM agency fees and how much should you expect to pay?
This articles will help you learn the following:
- What are the Standard SEM Services Pricing Models?
- How much does it cost to hire an SEM Manager?
- How much to invest in an SEM Professional?
- Monthly cost of an SEM Provider Company
What are the Standard SEM Services Pricing Models?
There are many players in the digital marketing industry: full digital marketing agencies, SEO agencies, SEM agencies, social media agencies and many other types of service providers (including freelancers and independent contractors). Also, in larger companies, SEM services are often done in-house.
Many independent providers have different pricing models and service fees, as well as monthly or yearly subscription plans. Also, some agencies prefer to work project-based, while others work on retainers.
The pricing models can be confusing, especially if you are new to the digital marketing world. While most clients prefer a transparent pricing model, there are several industry-specific details you should understand. What’s more, knowing how SEM services are billed will help you better determine your digital marketing budget and how they can grow in the future.
These are some of the questions that often pop up when talking with new clients:
How much do digital marketing and SEM services really cost?
How do I know how much should I pay?
What payment plan is the best for my business? Can I change it in the future?
There are four main pricing models in the SEM industry. Hopefully, these will help you answer the questions mentioned above.
- percent of revenue – the client pays a percentage of the resulting revenue; because the client pays from the revenue generated, there is one major disadvantage: the client doesn’t have the economy of scale: if the revenue doubles, the SEM costs double as well; in the long run, this strategy is not feasible and needs constant readjustments;
- percent of ad spend – this model is similar to the previous model – some SEM agencies bill the clients as percentage of their ad spend; rates start from 5 and go up to 20 percent; some clients avoid this pricing model because the ROI is not obvious, and there is no economy of scale (your costs grow together with your spending);
- flat monthly fee – this is the simplest payment model; it provides the client economies of scale and it’s adaptable; an SEM or paid search agency will use this pricing model to better control costs for your business; most service providers use this pricing model and most offers will be based on this model; you can opt either for a subscription-based model, where you pay a monthly fee for a set period of time (6 or 12 months) or as needed (adapted to your specific needs)
- flat project-based fees – these pricing models are adapted to your specific one-time needs; usually, flat project-based pricing models are used by freelancers and independent contractors; small projects, like updating a part of your website, fixing links or doing basic keyword research should be billed independently;
How much does it cost to hire an SEM Manager?
Larger companies may want to hire their in-house SEM manager to plan and implement their digital marketing campaigns. Usually, SEM managers will work in the marketing department of larger companies and will manage a team of SEO, e-commerce and SEM analysts. The costs of having an in-house SEM team are higher than outsourcing to digital marketing agencies, but it’s financially viable for large companies.
Salaries for SEM analysts start from $47,000 and can go up to $96,000 per year, while salaries for SEM managers can start at $58,000 and reach $116,000 per year. Salaries are similar for SEO analysts, SEO managers, and e-commerce specialists. A full team of digital marketing specialists (5 to 12 employees) can cost you about $300,000 to $600,000 per year.
How much to invest in an SEM Professional?
According to a study done in 2016, the average business spends about $35,000 per year on search engine marketing services. Including social media, email marketing, mobile and display advertising, the figure goes to $80,000 per year.* That’s a lot of money, and everyone expects to see these figures go even higher in the future. So how much should you pay?
Generally, companies spend 10 to 12 percent* of their revenue on marketing. The average company is expected to pay 45 percent of their marketing budget to online marketing. This figure is expected to grow, as well. For instance, a company has a revenue of $1,5 million, will spend approximately $74,500 for digital marketing every year. SEM services are roughly 50 percent of your overall digital marketing, so in this example, you should expect to pay $38,000 for SEM services every year.
Monthly cost of an SEM Provider Company
Most SEM agencies use a flat fee pricing model. Here are the median prices for SEM services, as a flat monthly fee:
- basic SEM services – $499 to $999 per month – the most basic package includes simple set-up services, content and social media services
- locally focused SEM services – $2,000 to $4,999 per month – the ideal service to get found online, especially for local markets and businesses; with this plan, you’ll get advanced social media campaigns, PPC campaigns and sales funnel creation and implementation;
- multi-location SEM services – $5,000 to $19,999 per month – ideal for targeting larger markets and multiple locations; you’ll get multiple-targeted social media campaigns and advanced PPC campaigns;
- high-level SEM services – more than $20,000 per month – this is ideal if you are active in a competitive industry; you’ll get a complete digital marketing plan, full SEO services, social media, and PPC campaigns.