What is the best business model for AdWords Management?

As I look towards 2008 I realize my business model needs adjusting, not much mind you. But in which direction is the question.

PPC management/service/consulting business models vary, but seems to me they fall into variations of these three models.

Flat Fee
Per Hour

Here are basic pros/cons of these models from my perspective.

Flat Fee:
Pros – easy to understand, easy to administrate.
Cons – some clients subsidize others, each client situation can be drastically different even if ad buys are similar.

Per Hour:
Pros – the client gets what they pay for, the experts time. Time consuming clients aren’t subsidized by less time consuming clients.
Cons – billing can fluctuate, constant negotiation of current fee amount based on time allotment.

Pros – All consumers like results based compensation. They pay only when they win.
Cons – In the Paid Search biz, so many factors, out of the control of the PPC manager, can affect results. Managers can burn a lot of time for which they are not reimbursed, due to factors out of their control.

I have always worked under a strict Per Hour model, time is money. With the estimated amount of fee/time required based on a percentage of ad buy.
But the administration of a strict Per Hour model is, to be brief, a big pain. All food for thought for anyone in this biz making some adjustments for ’08.

The thoughts of any clients, prospects, collaborators, competitors, or just passers-by, would be appreciated.

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Tom Hale
Internet Strategist – AdWords Specialist