What you should know (i.e., know your numbers) and Why
Let's be candid (and if you know me, that's how I am), sit down with me and have a chat about fees and commissions. Marketing services ain't cheap. Digital ads ain't cheap. So, when you hire a marketing consultant it is VERY important you understand where your money is actually going. You should be able to make the choice to decide whether or not you're paying the commissions or fees and you should be able to negotiate it.
There are two main ways marketing companies earn their income: Consulting Fees for their Services and/or Product Based Commissions. Many companies do a blend of both. There are important reasons why you should know upfront what your marketing company is charging you.
Product based commissions usually applies to advertising - both digital and print (google ads, pay-per-click, search campaigns, advertising, collateral print, etc.). Many companies that sell these "marketing products" charge from 30% to 60%. Often these charges are for ad design and management. More on this later. You should know up front because if someone tells you that a google ad campaign will cost $800/month, you need to know how much of that $800 is actually going to Google and how much is going to the firm for management or commissions. Digital ads usually don't charge unless you get results (clicks) so why pay for clicks if you don't get them? You may be surprised at how much is actually going toward the marketing company instead of your digital ad. Same goes in printing. A marketing company may coordinate a print project for you (from creative to development to final design) and then charge an additional 30% of the print costs. This used to drive me crazy as a business consumer. I felt that was wrong when I could have coordinated directly with the print company and saved that 30%. Instead, I felt that as a business owner, I should have that choice.
Marketing companies often re-sell products as well and charge above their cost. This is typical and not something to think of negatively. This is essentially how any restaurant or retail store operates, both brick and mortar and online. They purchase at wholesale and sell at multiples above the wholesale to cover their business costs in selling that product (employees, overhead, packaging, etc.).
Most marketing companies charge some kind of consulting or management fee - usually an hourly rate or a flat rate (monthly, quarterly or annual). This is how we charge for marketing services at the Marketing Outpost. We charge hourly rates for ongoing, pay-as-you-go marketing consulting. We charge flat monthly rates to act as your marketing consultant for regular marketing activities. At times, we charge a flat rate for a specific project.
In full disclosure, we do not charge any commissions for any product or vendor that we work with. If we recommend a product to you and we are working with a third-party provider to provide that product and they charge a commission, we will let you know upfront so you are aware. This is often the case as we work with various search engine marketing companies to put together digital ad campaigns. Nor do we charge commissions or upcharge for any of the vendors that we work with such as photographers, graphic designers, website designers, etc.
The only product we re-sell is Yext. Why? Because we have fully vetted the product, gone through training and believe it is an excellent and effective tool for local, brick and mortar businesses that truly utilize all of its functions and capabilities. We charge 10% above our wholesale price and fully disclose that when we recommend it. We do not recommend it to everyone.