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Need Proposal Advice for Client

by Shane F
6 replies
Hi all, I just need some advice towards submitting an offer to a client of ours (my brother and I). We have already done a good amount of work for this client with coding/programming/SEO and continue to work for him on a monthly basis but now he wants us to examine and take over his on site advertising.

The site would be summed up as the Spanish TMZ or PerezHilton com. He averages 500,000 unique visitors a month, younger audience, most come for hot trends, gossip, celeb info.

Right now he runs with GlamMedia who pays him $2 CPM. They are his only source of income for the site and we told him we could do much better. GlamMedia is just putting up zip/email submits and $1 trial offers.

We are thinking that we could open him up a few CPA accounts, get the referral as a nice risidual and be able to make him much more money than he is currently getting.

The question is how should we propose the fee to him for this as far as price for month to manage the ads?

Set fee?

% over what he is making now?

Mixture of the two? Or something else?

He is also asking what he can expect for revenue once we take over. I don't even think I could ballpark this figure. Any ideas?

Thanks for any advice you all have.

Shane

#advice #client #proposal
  • Profile picture of the author JohnMcCabe
    Here's a starting point for you...

    Traditional ad agencies charge (typically) 15% of ad spend. This is in the form of an agency discount given by the media. I.e., The cost of an ad is $100, you bill the client $100, the media company accepts $85 in payment.

    PPC managers typically charge based on a setup fee plus a percentage of the ad spend.

    Top gun copywriters charge, and get, an upfront fee plus royalties (either a flat fee or percentage of gross on every unit sold).

    Notice a theme here? More results, more rewards.
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    • Profile picture of the author Shane F
      Thanks for the advice John. Still a little confused as we have never done anything like this before for a client.

      He tells us he is only making about $2,000 a month from that site now so it seems realistic to us that by placing CPA ads on the site our self, that his income would be significantly higher.

      Should we tell him set monthly price plus percentage over the $2,000 or is that being too greedy in the beginning?

      Thanks, Shane
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      • Profile picture of the author JohnMcCabe
        That sounds like a fair starting point. If you were being greedy, you would palce the ads and offer him the royalty.

        If you decide to go with a monthly fee plus a percentage, make sure you can monitor the results. Get that in writing.

        Another thing you can do to protect both of you is add in periodic reviews of the fees and percentages - quarterly, semi-annually or annually. The odds are that you will put more time in at the beginning, so you may want a sliding monthly fee and a growing percentage as your campaigns become more efficient.
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        • Profile picture of the author Shane F
          Solid advice John, thank you! I will get everything in writing. I will make this a separate account from his programming and SEO work.

          One more question...what percentage should we shoot for? He has money to spend and this site is just a "hobby" for him. He said he really doesn't care what he makes as long as he doesn't have to worry about it. That leads me to believe that as long as he makes over what he does now, minus the monthly fee, we could shoot for a high % share. Do you agree?

          Thanks, Shane
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          • Profile picture of the author JohnMcCabe
            Shane, if the numbers get big enough, he will care. Guaranteed.

            That's one reason for the periodic review. A client is less likely to get resentful over what they're paying you if they know they can address it in the foreseeable future.

            Given what you've been told, yeah, I'd shoot for a fairly high percentage in the beginning. You might think about proposing a starting point of a monthly fee to cover your time, and an even split after he covers his $2k. This part of your business relationship is closer to a partnership than you other work, anyway. He's providing a platform and targeted traffic, you're providing management and expertise.

            I'd consider proposing a monthly fee, then a 50-50 split on any gross over his $2,000. You can always negotiate down from there. Remember, hogs get fat, pigs get slaughtered.

            If you'll be doing any PPC, you'll want to calculate gross at commission minus PPC cost, to be fair.
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            • Profile picture of the author Shane F
              Originally Posted by JohnMcCabe View Post

              Remember, hogs get fat, pigs get slaughtered.
              John, you are right, time to get PAID. I just talked with one of my CPA account managers and managed to get 7% referral fee if we are able to bring this client in.

              We are writing the proposal now with the set monthly fee and 50/50 net profit split. Writing in the periodic review as well.

              We really appreciate the advice and expertise John.

              Shane
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