The standard arrangement in media buying is a percentage of spend. The agency takes somewhere between 10% and 20% of whatever passes through the ad accounts. It is simple, it is traditional, and it quietly puts your agency's interests in direct opposition to your own.
The arithmetic
Suppose you spend $50,000 a month on media, and your agency takes 15%. That is $7,500 in fees.
Now imagine the agency discovers that $15,000 of that spend is being wasted — a channel that looks profitable in the dashboard but is actually harvesting people who would have bought anyway. Cutting it would improve your business immediately.
Cutting it also costs the agency $2,250 a month, every month, forever.
| Scenario | Your media | Agency fee | Agency incentive |
|---|---|---|---|
| Keep the waste | $50,000 | $7,500 | Say nothing |
| Cut the waste | $35,000 | $5,250 | Lose $2,250/mo |
| Scale a weak channel | $70,000 | $10,500 | Gain $3,000/mo |
Nobody has to be dishonest for this to go wrong. Under pressure, with an ambiguous data set — and the data is always ambiguous — a recommendation to spend more will feel more defensible than a recommendation to spend less. Incentives do not make people corrupt. They make certain conclusions easier to reach.
You should never have to wonder whether your agency's advice is about your business or about their invoice.
The second problem: it prices the wrong thing
Percentage pricing assumes the work scales with the budget. It does not.
Restructuring an account, rebuilding a product feed, writing a measurement plan, negotiating rates, producing creative — that work costs roughly the same whether the campaign runs on $20,000 a month or $200,000. A percentage charges you ten times more for identical work, and charges a smaller advertiser too little to be served properly.
It also creates a strange penalty for efficiency. If we improve your targeting so that $30,000 does what $50,000 used to do, we have made you money and cut our own income. That is a bad system.
Three models that align instead
Fixed monthly fee
Priced on scope: how many platforms, how much creative, how deep the reporting. The fee does not move when the budget moves. Advice about spending more or less becomes a genuinely neutral conversation. This is the model we use for retainers.
Fixed project fee
For work with a defined end: an audit, a launch, a rebrand, a measurement rebuild. Quoted once, billed in instalments, delivered against a written list. The client knows the cost before the first meeting.
Fee plus performance bonus
A lower base fee, plus a bonus on an agreed outcome — qualified leads, contribution margin, new customers. It works, but only under two conditions: the metric must be one the agency genuinely influences, and the measurement must be agreed in writing before the campaign starts. Otherwise you spend the quarter arguing about attribution instead of selling.
What to ask any agency about pricing
- "Does your fee change if my budget changes?" If yes, you now know which direction their advice will lean.
- "Whose name is on the ad accounts?" They should be yours, with your billing details and your admin access. Accounts held in the agency's name are a hostage, not a service.
- "Do you receive any rebate or incentive from the platforms or media owners?" A legitimate question, and the answer should be immediate and specific.
- "Can I see the raw account?" Any reluctance here tells you more than the answer will.
Where the media budget should sit
Ours is a simple position: the advertising budget is paid by the client, directly to the platform, on the client's own payment method. It never passes through our accounts. You see the rate the platform charges, we invoice our fee separately, and there is no line item anyone has to take on trust.
This is not a moral stance. It is an operational one. When the money and the advice come from different places, nobody has to wonder about the advice.