How Much Do SEM Services Cost in 2020?

Around 65% of small-to-midsized businesses (SMBs) use pay-per-click (PPC) advertising, also known as search engine marketing (SEM).

What do these companies pay for SEM services, though? On average, SMBs spend $9000 to $10,000 per month on SEM, which includes ad spend and management costs.

When it comes to SEM pricing, though, a range of factors influences how much you pay for SEM. Keep reading to find out what they are and how much you’ll pay for SEM services in 2020.

What should I expect to pay for SEM services?

Every ad strategy is different, which is why search engine marketing prices range widely. Industry research and studies, however, show that most SMBs invest $9000 to $10,000 per month on SEM services and campaigns.

What your company will spend depends on several factors, including:

• Your ad spend budget
• Your SEM agency
• Your advertising strategy
• Your campaign’s scale
• And more

Depending on your approach, agency, and ad budget, you may invest more or less than $9000 each month. Understanding the factors that determine SEM pricing, however, can help your company make smart decisions when it comes to choosing a plan, agency, and strategy.

Keep reading to learn everything about SEM pricing, from the different pricing models used by agencies to the unique factors that shape SEM agency pricing. If you’re looking for custom SEM pricing information, contact us online or call us at 888-601-5953 for a free quote!

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SEO vs. SEM: What is the difference?

Search engine optimization (SEO) describes an umbrella of strategies for improving your visibility in search engine result pages (SERPs). This digital marketing tactic focuses on your organic (rather than paid) ranking or position in searches related to your industry, business, or products and services.

SEM refers to paid strategies for improving your visibility in the SERPs via paid ads. Previously, marketers used SEM to discuss organic and paid techniques. In recent years, however, SEM has become synonymous with paid-only tactics, versus paid and organic ones.

Overall, the difference between SEM and SEO is that one uses paid strategies and the other organic.

4 SEM agency pricing models you need to know

As you research SEM pricing, you’ll come across several different pricing models, including these four:

1. PERCENT OF AD REVENUE

With the percent of ad revenue pricing model, your business pays for results.

Instead of paying your agency a monthly flat fee, for example, you pay based on your ad strategy’s results. This SEM agency pricing model can seem attractive to many businesses, especially SMBs, but it does come with some drawbacks.

Learn more about the perks and downsides to the percent of ad revenue pricing model:

Advantages of this SEM agency pricing model

The benefits of the percent of ad revenue pricing model include:

• You pay based on results or revenue generated
• You minimize advertising costs during slow seasons

Overall, this approach to SEM pricing offers minimal value for the short- and long-term.

Disadvantages of this SEM agency pricing model

The downsides of the percent of ad revenue pricing model include:

• Zero predictability for monthly SEM costs
• Pricing spikes during busy seasons
• Low-value, low-return targeting to generate revenue
• Payment debates for assisted conversions

While the percent of ad revenue model generates immediate interest among businesses, it often delivers little value in the long-term. The lack of predictably that comes with this SEM pricing model makes it a risky choice for companies.

2. PERCENT OF AD SPEND

With the percent of ad spend pricing model, your SEM pricing depends on your monthly ad spend.

This pricing model introduces some predictability because your company determines your ad spend. Depending on your ad spend, you may pay your agency five to 20% of it.

For example, if you invest $5000 and your agency takes 14% of that, you would pay them $700 each month.

Learn more about the advantages and disadvantages of this SEM pricing model:

Advantages of this SEM agency pricing model

Benefits of the percent of ad spend pricing model include:

• You receive a predictable monthly invoice
• You set a management fee that aligns with your budget
• You decrease the likelihood of agencies targeting low-value opportunities to generate revenue

From a cost perspective, this SEM agency pricing model offers several advantages to businesses like yours. You can budget for SEM costs each month, which can protect your advertising budget. Plus, you remove the motivation for agencies to go after low-value opportunities to deliver bare-minimum results.

Disadvantages of this SEM agency pricing model

Drawbacks of the percent of ad spend pricing model include:

• Agency focus on increasing your ad spend to boost its revenue
• Raises to your ad spend also raise your SEM pricing
• Payment remains consistent, even if ad campaigns underperform

Overall, the percent of ad spend model offers more advantages than disadvantages. You can predict your costs each month, as well as remove low-return strategies. Not to mention, your agency focuses on providing your business with the best results versus any results.

3. FLAT RATE MANAGEMENT

With the flat rate management pricing model, you pay a flat monthly rate.

Like the percent of ad spend model, flat rate management offers predictability.

Your business can anticipate your SEM costs, which helps your team optimize your online advertising budget. Not to mention, in busy seasons, you know your SEM agency’s pricing won’t change, even if you increase your monthly ad spend.

Learn more about the upsides and downsides of flat rate management for SEM services:

Advantages of this SEM agency pricing model

Perks of the flat rate management model include:

• You can keep ad management costs predictable
• You can modify ad spends without increasing ad management expenses

If you’re looking for consistency, flat rate management may work well for your business.

Disadvantages of this SEM agency pricing model

Drawbacks of this pricing model from SEM agencies include:

• Paying a higher upfront cost
• Receiving fewer deliverables due to a flat-rate fee
• Experiencing add-on fees for extra services or requests

While flat-rate pricing models offer convenience and predictability, it can impact service quality. If you feature an elaborate campaign and strategy, for example, your agency may charge extra, which cancels any potential savings the flat-rate fee offered initially.

4. CAPPED MANAGEMENT BASED ON PERCENT OF AD SPEND

With the capped management pricing model, you pay a flat-rate fee or a percentage of your ad spend.

As an example, an agency may require 14% of your ad spend or $500 per month.

How you pay depends on whichever amount is higher.

If your company spends $5000 each month on ads, you will pay by percentage, or $700 per month, because it’s higher than $500. In comparison, if you spend $2500 on ads each month, you would pay the monthly flat-rate fee of $500. That’s because $350 (or 14% of $2500) is less than $500 per month.

Learn more about the positives and negatives of capped management:

Advantages of this SEM agency pricing model

Benefits of this SEM agency pricing model include:

• You get predictable pricing each month
• You set a custom monthly ad spend
• You scale SEM pricing to your ad spending

For many businesses, capped management pricing offers a compromise between other pricing models.

Disadvantages of this SEM agency pricing model

Downsides of capped management pricing include:

• Pay a higher price than for in-house management
• Settle for a lower ad spend due to capped management price
• Find zero agencies within your price range

While more complex than other SEM agency pricing models, capped management is popular. Unlike other SEM pricing models, it takes advantage of both flat rate management and percent of ad spend models, which offers your business options when it comes to SEM services.

What determines SEM pricing?

Your agency’s pricing model isn’t the only factor that determines what you pay for SEM. Several other elements influence SEM pricing. While you can control some, others rely on external factors. Either way, you want to know about them before you sign with an agency.

AD STRATEGY

Your industry, as well as advertising goals, all shape your ad strategy.

If your company operates in a competitive sector, then you need an agency and strategy that can compete. Otherwise, your business will invest thousands of dollars in ad campaigns that fall flat and fail to generate any return on investment (ROI).

That’s why your business can’t ignore this SEM pricing factor.

Instead, you need to consider it when researching and vetting agencies. A seasoned agency with experience in your industry can help your business develop, launch, and manage campaigns that beat competitors, drive clicks, and generate results, from new leads to high-value sales.

AD SPEND

Ad spend is another undeniable influence on search engine marketing pricing.

It’s the basis for some SEM pricing models too. Even agencies that don’t use ad spend to determine service pricing will ask about your expected ad spend. That’s because your ad spend influences the type of strategy an agency can build for you.

Your ad spend can also impact which SEM companies will work with you. If you set a low ad spend, for example, you may find that agencies with the experience you want will turn down the chance to develop and manage your campaign.

If your company ever encounters this situation, rethink your ad spend because it’s probably too low.

Trusted and reputable SEM agencies, like WebFX, want to help your business accomplish your advertising goals. An ultra-low budget, however, can make that impossible. That’s why these agencies will decline the opportunity to partner with your company.

If your business ever encounters this situation, consider asking the agency what ad spend they would recommend. With their reputation in the industry, you can count on them to provide an accurate, unbiased recommendation.

AGENCY EXPERIENCE

The experience of your agency will also determine what you pay for SEM.

Like all services, from landscaping to paid advertising, experience comes with additional cost. You pay for that expertise, which can help you develop better bid strategies, copy, and landing pages. All these improvements contribute to increased ad performance and returns.

While partnering with an agency with more expertise can cost more, it often provides a smoother experience. You can trust the SEM company to develop a competitive strategy, follow industry best practices, and deliver quality customer support.

No matter how much your business invests in SEM, you want to make the most of your budget.

Hiring a low-cost agency may save money upfront, but it often costs you later. From working with a difficult-to-reach account manager to coping with hidden fees, an inexperienced and cheap SEM company can cause massive headaches for your team and business.

That’s why, if outsourcing your SEM management, you need to make agency experience a priority.

CAMPAIGN SIZE

The size of your ad campaign also shapes your SEM pricing.

In most cases, your agency will oversee the size of your campaign. They will determine, based on your goals, how many campaigns to run and how many ad groups occupy each campaign. If your company has preferences for how many campaigns you want, you will impact what your agency can do.

For example, if your business sets a $5000 monthly ad spend and requests 10 campaigns, that restricts where your agency can spend your budget. They will need to fund each campaign and its ad groups, which can limit the performance of campaigns with higher costs.

While it’s helpful for your company to provide input, it’s also beneficial to take advantage of your agency’s expertise. With their experience, combined with your goals, they can recommend and develop campaigns that offer the most value and ROI.

AGENCY PRICING MODEL

Your SEM agency’s pricing model will also influence your SEM costs.

If your agency uses the percent of ad revenue pricing model, for instance, your monthly ad costs could vary widely. In comparison, choosing a flat-rate management agency offers your company predictable monthly pricing for SEM.

When it comes to pricing models, your business will need to review each one and determine which models work for you. For the best results, think about the upfront and long-term value of each model for your company.

With these SEM pricing factors, your business can build an accurate budget and ad spend for your advertising efforts. You can also use these features when it comes to finding, researching, and hiring an SEM company.

FAQs about SEM pricing

Got more questions about SEM pricing? Get answers with our FAQ!

What is SEM?

SEM, also known as search engine marketing, describes online paid advertising strategies for promoting your business, products, or services. A few examples of these strategies include social media advertising, geofencing advertising, and PPC advertising.

What is SEO?

SEO, also known as search engine optimization, encompasses online strategies for improving your visibility in organic search results on search engines like Google and Bing. As a part of SEO, you optimize your website for on-page and off-page factors that influence your rankings in search results.

What is the difference between SEM and SEO?

SEO and SEM focus on your online visibility but use different channels and strategies to maximize it. While SEM uses paid tactics, like PPC, SEO focuses on organic ones, like on-page optimization or content marketing.

What do SEM services include?

If your company invests in SEM services, most plans will include the following:

• Setting up your advertising accounts, like Google Ads or Microsoft Advertising
• Researching your targeting options, from keywords to behavior
• Developing your ad creatives, from images to copy
• Creating your ad campaigns and ad groups
• Managing your bids
• Testing your ad performance
• Providing monthly reporting

Before you partner with an SEM agency, ask what their services include.

What do SEO services include?

If your company uses SEO services, you can expect plans to include:

• Setting up Google Analytics
• Auditing SEO strategy
• Researching keywords to target
• Analyzing competitor SEO strategies
• Optimizing on-site SEO factors
• Developing fresh content
• Conducting content outreach
• Monitoring keyword rankings
• Providing monthly reports

Again, before you sign with an agency, ask what their services include.

How much does SEM cost?

SMBs invest $9000 to $10,000 per month on SEM services. This price range includes not only management fees but also ad spend budgets. Large companies, like those at the enterprise-level, will often spend more to advertise online.

How much does SEO cost?

Companies spend an average of $750 to $2000 per month on SEO. Businesses looking for consulting, rather than ongoing SEO service, can expect to pay $80 to $200 per hour. In comparison, a one-time SEO project costs $5000 to $30,000.

Why use SEO services?

Using SEO services offer several benefits, including:

• Increasing your visibility in search results, which helps you reach additional consumers
• Improving your online sales and lead numbers
• Boosting your presence in local search results to drive foot traffic
• Building your competitiveness in a tough online market

Professional SEO services also help your company adapt to user habits. More than 90% of online experiences begin with a search engine, which makes SEO critical. If your company doesn’t appear in search results, you ruin your chances of getting noticed by shoppers and business buyers.

Why use SEM services?

Investing in SEM services provide your business with several advantages, including:

• Earning your website immediate online presence in search results
• Getting your site at the top of search results and in prime locations on websites
• Increasing your brand awareness, online revenue, and lead generation
• Optimizing your advertising budget by using cost-effective strategies
• Improving your paid advertising ROI

The fact that companies earn an average ROI of $2 for every $1 spent also makes SEM services valuable. Whether you want to attract new or existing customers, you can do it with a targeted SEM campaign and an experienced SEM agency.

How much does WebFX charge for SEM services?

If you’re thinking about investing in professional SEM services, WebFX offers cost-effective plans.

We also publish our SEM prices online, making it easy for you and your business to compare rates, plans, and agencies. If your company requires custom pricing, you can always connect with a WebFX strategist by contacting us online.

SEM Management Pricing

Get a custom strategy and SEM pricing from WebFX

With more than 650 campaigns managed, plus more than 200 SEM specialists, WebFX is the SEM agency for SMBs. Our decades of expertise, as well as advanced artificial intelligence technology and client-focused approach, make us the trusted partner for businesses across the globe.

Discover how a custom SEM strategy from our award-winning team can help your company optimize ad costs, generate sales and leads, and expand its operations by contacting us online or calling us at 888-601-5953 to speak with a strategist!

Ready to start your SEM campaign? Call 888.449.3239 or contact us online today to learn more about how WebFX can help with your advertising challenges.