Got a question.
Client with budget of $75,000/mo approached us to manage their Pay Per Click (PPC) campaigns.
We charge a 15% fee for this. After a month they're now refusing to pay the next invoice claiming we've only done "1 ad" despite rebuilding the entire account and showing the work too.
Put in about 200 hours so far and now he's trying to change the terms of the contract.
Should we pursue this legally? It's a large contract for my agency and I've only ever had this issue once before but made sure this time to be upfront for expectations of how much the next invoice would be once the percentage kicked in.
He was always okay with it upfront and now that it's due he's pulling every excuse to make it seem like we are trying to steal from HIM.
Would it be wrong to pull and delete all the ads and landing pages we've built if he doesn't pay?
22 👍🏽22100 💬🗨
You should seek qualified legal counsel on this, rather than an SEO group who can't know all the details.
But on the expectations side of things, did you use all of the client's budget for the month and generate significantly higher returns on the spend than they'd gotten before. Because if they made more profit without you, of course they won't want to continue.
We drove about 40% more leads on the campaigns we managed. His issue is he now doesn't want to pay for management unless we rebuilt landing pages in the first month too.
The expectation was always set that lps were part of the second phase once the account was restructured.
From a legal standpoint I totally get it and was more just trying to see if going that route is something that should be considered (the legal side would of course be taken up with an attorney first).
Ammon 🎓 » Mawji
Never mind leads, because driving more, less-qualified leads can result in less profit. Did you increase actual end *profit* enough to justify the 15%? Remember, the best metrics are the bottom-line metrics – cold hard cash.
I have to ask because you omitted any kind of metrics of actual results or performance in the OP, and just focused entirely on the contract side. For clients, it's all about the ROI.
200 hours is a huge amount of time. I mean, if we assume a standard 40 hour week, you're claiming to have had the equivalent hours of someone on this full-time for 5 weeks. If that's legit, then you almost certainly need some better processes.
I have had clients with literally 10 times that monthly spend who didn't need anywhere near that amount of hours on even the first month setup, where they had multiple products over multiple campaigns.
I've never liked to charge a percentage on monthly spend, as it sets entirely the wrong reward. You should be paid more for making their campaign more efficient – the same results for LESS spend. Paying on spend is, to me, a terrible arrangement as it mostly rewards inefficiency.
One thing you absolutely need to consider is the cancellation clauses of your contract. It would be pretty pointless taking them to court for one month's fees if they can still fully legitimately cancel the next month, once you figure all the costs. Unless you have grounds for some greater claim, it probably wouldn't be worth it. But that's something to take up with a lawyer.
Mawji ✍️ » Ammon
The cancellation clause is cut and dry. 30 days notice and all outstanding invoices must be paid 30 days prior to cancellation.
Thing is we increased sales at less leads but all he cares about are leads.
Feels like the whole thing was just a shady way to avoid paying the full invoice. If this happens next month he's getting fired.
Perry » Mawji
Lead pages were phase 2???.. What a disgrace. Classic agency running ads to bad pages.
Client probably refusing to pay, because the ROI is trash, and you're making excuses.
Mawji ✍️ » Perry
Ah yes the classic know it all who thinks everything gets done in one shot.
His leads were up 40% with the launch of new campaigns so then we could highlight exactly what needed to be changed with the landing pages.
You don't go hung ho and change everything in one go. Doesn't make for smart, deliberate changes to the LPs.
Perry » Mawji
Leads up 40%, but you still fail to mention the most important kpi: ROI.
It's unethical to launch campaigns half baked. You should give the client the best chance for success on day 1, even if launch has to be delayed.
If leads were up 40%.. that means you had previous data to work with, so the "highlight what needs to be changed" is also trash.
Mawji ✍️ » Perry
I have mentioned it. In another comment. If you took the time to read through you'd have seen that.
And no, all we have is lead data in his Client Relationship Management (CRM), but they'd never implemented tracking or heat maps on their existing landing pages so we needed to gather data first.
Don't come in here trying to act like we tried cheating a client when you don't know the first thing about the situation beyond a very short FB post and haven't even read through the rest of the discussions here.
Just knowing how many leads come through doesn't tell you what to change on an LP to improve conversion rates. Quit trying to act tough by talking shit. It's not a good look 👍🏽
Sticky situation for both parties, this isn't the ideal place to ask legal advice in as Ammon said. I'd check with a lawyer to review the contract and know your options and legal expectations IF you were to win, and IF you were to were to win WOULD you get paid. A lot of people can win a court battle but getting paid can be an entirely different issue as there are really no penalties for not paying.
Yeah I highly doubt I'd get paid if he's already not paying what would be the cheapest invoice of the contract.
Good thing is we did charge a setup fee and get paid for that so this isn't a total loss
Ammon 🎓 » Mawji
Always, ALWAYS, get paid up front. If they want to pay half now half later, instead turn that into a conversation about smaller steps on both sides – i.e. half as much work for half as much money, which makes it about the investment size.
200 hours of one month running and managing a Pay Per Click (PPC) campaign?!😳
Yes. It's surprising how much time you can put into managing 75,000 ad spend when you're in there daily. It also includes time spent on building and testing landing pages, creating copy, designing ads, building scripts, a/b testing etc. we don't charge 15% just to run an ad lol
It's a bit too much of a question to give a straight answer. With a client this big, I'd pursue cordially and relationally as much as possible to get it resolved, give him what he wants to prove how much work you've put in. If that goes no where, then yes make some legal steps. But I'd do whatever it takes to get it resolved before going that direction!
Mawji ✍️ » Brandon
Honestly I am trying to be as cordial as I can but it's tough when he straight up ignored proof of work that's clear to see and keeps making bogus claims 🙄
Koszo » Brandon
I think you need to communicate that clearly and tell him exactly which of his products will get more traffic and convert and why exactly.
I think of it like if a theoretical physicist spent 200 hours and wrote a dozen pages, it wouldn't mean anything to me and I'd be like I could scribble that out in 20 hours. What the hell did you do for 200? But when he tells me he is now one step closer to figuring out how gravity works, I'd be interested!
Just throwing this out there but did the communication happened in the emails only? Have you had an actuall call? You'd be amazed how much one call can solve.
I've dealt with disputes over the years and from my experience this is either a communication issue (you failed to communicate the expectations upfront) or the client is difficult and they deal with issues not related to you.
If you believe the communication was your fault and if the account is worth salvaging then it might be worth doing some free work in good faith. If you believe the client is difficult you should plan on an exit strategy including partial refunds if necessary. Always follow your intuition.
I've been asking for a call all day but he just keeps whatsapping 🙄
My PPC manager Did some digging and it's looking like he does this to every agency he hires.
Hires them for 1-2 months, pretends he's not happy and fires them without paying.
Lucian » Mawji
Yep run away and take it as a lesson. This guys sounds like is a leech
Ammon 🎓 » Mawji
It certainly wouldn't be the first client to pull such shady practices. More common still in organic where some shysters get agencies to pitch for contracts they never intend to take, just for the free audits, campaign ideas, etc in the proposals.
Mawji ✍️ » Ammon
Yeah we found out he's done this to a few agencies. The difference here is we've actually increased sales dramatically for him so that's why he isn't just walking away.
Spent the last 3 hours going back and forth with me which he really wouldn't do if he wanted to cancel.
He's paying 50% tomorrow and the rest on Friday.
I'll decide at the end of the month if we're keeping him around 🤔
Building and rebuilding ads for a 75K budget 200 hours doesnt seem like much.
I would Pull the ads and landing pages and hold them until they pay, for the work then give them the ad and the landing pages and cut ties.
Looks like this is what's happening. Getting paid tomorrow and Friday apparently and then I'm gonna walk away. Not worth the stress
Math here shows you paid yourself $56.25 an hour for that month. At $75k per month budget, that means you would need to generate at least $150k in revenue for anyone to even think you were on the right track with this. I'd want to see $375k in revenue to consider you doing your job – but so long as you hit that first number in the first month, I could probably justify that you're on the right track and give you another month or two to hit that $400k mark. And, if you are really doing a good job, I'd actually like to see that $75k budget bringing me a clear 3/4 million in new sales monthly. That's the real goal here – but a half million (in some niches depending upon margins) may be enough.
So now… when we're talking about numbers that big – how close to ANY of those numbers did you actually hit with your $50+ per hour work. I see no mention here of those kinds of things – which are, after all, really the ONLY thing your client actually cares about.
Good point, even in tough niches I'd expect to see at least 150k.
Yeah. But you'd also need to be selling a product with a 70-80% margin on it to not actually be LOSING money if you only hit that 150K mark. Again – first month of a good adaptive strategy? Maybe. But it's almost certainly not sustainable over the long term – so the plan better be designed to adapt.
Mawji ✍️ » Truslow
1 closed sale is worth $15,000. They had 35 last month from our campaigns.
Then there's some math you can work with to justify your existence. If 75k can be shown to have generated 525k in revenue – then a lawyer should be able to tell you if you have a case for payment.
As others have suggested – we can't help with legal specifics but it sounds to me like you can financially justify consulting with legal expertise and the stakes seem high enough to warrant that exploration.
Ammon 🎓 » Truslow
indeed, and furthermore, even when this issue gets cleared up, if I were you, Shaneali, I would go consult a lawyer to get clauses in your contracts so you never have to deal with the issue again. A good contract lawyer can save you so much time (and potential legal costs) later, by helping you structure a perfect contract for the specifics of how you operate, and explain to you exactly how to use it.
Mawji ✍️ » Ammon
So we do have clauses already in there but it's definitely time to tighten that up.
Honestly the reality is that a business owner that has built he's business to 7 figures a month is very clear with he's numbers.
Maybe he expected a better unit economic than what was provided.
Our company self manages its own Pay Per Click (PPC) and spends 15k a month with a $1-$12ish output to gross rev
If I was paying a PPC manager I would expect a better unit economic than what is being done currently otherwise their services are redundant.
If I had someone that could turn $1 into $20 revenue the question would be how much money can I pump into the campaign but whether or not your invoice should be paid.
People like your customer don't get to 75k adspend over night. He knows he's shit.
I would suggest calling him and asking if he's seeing an issue with the numbers.
Put aside your payment for the moment and get to the root of he's issue.
If u can perform you will have him for a lifetime but with people that don't look at vanity metrics it would be hard IMO to pull the wool over he's eyes.
Cut the shit and give him real talk.
All the best
One, congrats on getting 15% in 2021… a hell of an achievement these days. Two, I doubt a lawyer would be able to help outside of sending a stern letter that could be ignored. At this point, I would write the client off and send the invoice to collections. You'll only get part of the fee back after paying the collection agency, but at least there will be something.
I actually managed to salvage this! He's paying 50% tomorrow and then 50% on Friday. Once paid his account goes current and ads will be unpaused. Until then, let's see lol
Jeff » Mawji
Congrats again! It's always tough with advertising client – I once had one of my largest clients not pay for like three months – massive amounts of money. I knew they were good for it, but they were going through a funding round and things were busy. It's not like I could tell them, "hey, we're going to stop managing the account until you pay us!"
Mawji ✍️ » Jeff
Yup I had another client like that too and I'd work with them daily. I knew they were good for it but in this instance he straight up said "sue me I'm not paying it" 🙄
Why did you rebuild instead of optimizing years of work already done. That would piss me off
It wasn't years of good work. They repeated the same ad across several campaigns, only used broad match modifiers, no ad extensions, site links, and terrible quality score keywords. The landing pages look like something out of the 90s and oh conversion tracking? Nah that wasn't a priority apparently 😂
Sandhu » Mawji
That's abit harsh for just a months service so far, like seriously, it takes a whole month to get on track with ads these days
Yep, I mean it's taken 2 months to get to this point but we had to delay invoicing already because of that and website delays.
Couple that with our week long wait each time his writer wants to send us content, it's no wonder it takes ages to get things done for him.
My writer would have the content done in a day but his takes 3-4 business days
Sandhu » Mawji
I think u need a new updated contract with these guys and mention everything that slows you down and becomes a liability for u and your company and how it effects them
Mawji ✍️ » Sandhu
Honestly you're right. I think after we get paid we will rework the contract and be absolutely explicit in deliverables, timelines etc. as well as payment contingencies (specifically that there will not be any moving forward)
I'd love to talk about how to prevent this problem in the first place and get everyone's ideas on that. I know I couldn't hold the bag on 200 hrs of work in the first month.
I was advised by a business advisor to always make sure the money is ahead of your work.
This doesn't always work in all situations, but sometimes I break the work up in segments to do over time. Those segments might be defined by ad groups or campaigns or target audiences. Then I would work on the segment that has the best chance of making the client the most money in the first month. And then only work on that segment and stick to a budgeted amount of time each month. That way you're never behind in payment. But that depends on the client.
Another idea, again depending on the client and work involved, is I might also request 2 months up front to cover the extra time involved in the first 2 months.
Or another way is to charge a setup fee with converts to a management fee in month 2.
What do others do?
Charge a setup fee. That's what most of the agencies do or they have a minimal contractual term
Kathy » Lori
I used to. I sell a lead-gen program now for local businesses, specifically home improvement and home services. It's included in that. It works for local businesses. I would not recommend that for large campaigns.
Mostly I think you need to set the expectation
Mawji ✍️ » Kathy
That's exactly what we did, setup fee then management fee. He's refusing to pay the management fee now as he claims a campaign isn't "launched" unless a redesigned landing page is launched too.
Landing pages were not part of the setup fee or management fee though. It's a separate line item that he never paid for. Logic seems to have stayed away from this conversation for the client 😅
Kathy » Mawji
Ok, good. It sounded like you didn't have a setup fee. I include landing pages in my setup fee. So I agree with the client's expectations. However, if it was a separate line item in your contract, what he may think as a part of set up really doesn't matter.
We have the Setup fee which is based on what needs to be done such as landing pages, research, etc. Then we have a Monthly Maintenance fee so that we can track results, make small changes, issue reports, etc.
We also take a percentage of monthly generated sales, but that is billed about a month behind.
Depending on how things are going, we may approach them with additional ideas for campaigns, ways to refresh the website, or other upsells.
I believe that one of the strongest things we do when communicating certain matters to clients is that we always refer them to their contract. Example: "Section 3 of your contract reminds us that you will provide your company logo image and company colors to us within 7 days of signing this agreement."
Mawji ✍️ » Lorenzo
Oo mine is not that detailed.. I'm gonna have to rewrite it
Happens all the time unfortunately.
Best to move on the second you feel a business owner is unethical or a non payer.
A court ruling doesn't mean much either. If a business doesn't want to pay you, unfortunately they won't.
Set safeguards in place so they can only hurt you a little. Eg month my month contract. If they fail to pay for the following month you cease work for them.
All these people here grilling you about your performance and results are clouding the argument. This is about providing the service and getting paid. Not having to beg for your money because results are good.
Any time I see a situation like this, it reminds me of this:
https://www.YouTube.com/watch?v=jVkLVRt6c1U TL;DR (contracts, contracts, contracts)
Mike Monteiro: F*ck You, Pay Me
Awesome I'll watch this tomorrow!
You put in 200 hours & haven't touched the landing pages yet? I call BS on this entire post.
You're aren't delivering results & lying to everyone about it.
We have touched landing pages actually, we're in process of developing several this month when he decided not to pay.
Quick look at you and all I see is plenty of hate towards others in the industry. Go take a walk bud, your opinion means shit here 👍🏽
Ammon 🎓 » Perry
We don't know the complexity of the products or the market involved. Just mapping out the keywords and intents across a very large site with complex products can take a lot of hours. Yes 200 sounds excessive, and possibly unwise to cram all into the first month, but on the other hand, if the New York Times suddenly wanted an agency to completely take over all their PPC account stuff, well, that's probably something you'd have a team of people on for a month, just to get the transition right, or even to fully map out what is already there.
With that in mind, while it is fine to question unusual values, it is also smart not to throw accusations or judgements around when you really don't have enough information to make any.
Mawji ✍️ » Perry
You are still making a lot of assumptions here. In this case I could simply call bullshit that you spent 50 hours building thousands of landing pages.
Also once again throwing accusations about other members here isn't a good look.
You seem to work more in home services while this is a global healthcare brand. It's a totally different industry so your approach wouldn't work here.
I know so because he's fired 6 agencies that took the same cowboy approach of shotgunning landing pages and his leads dropped to nothing.
A deliberate approach is what's needed in this case as patients don't just hand out $15k for treatments. What is your idea of a landing page? A hero statement and a form? That takes 5 minutes.
Ours? 4k word persuasive long form pages to help them understand the technology and how it can help them.
Hardly think you'd bang out thousands of those at just 50 hours including researching the technology itself.
I seriously think you need to take a step back and think before you respond next. Every business is not the same and your response is exactly why top tier healthcare orgs come to us. Because everyone thinks a quick approach is going to work because it works for others.
Just keep it moving IMO. Either you have a bad client or you lack the business savvy and skill to manage the one you have.
It's definitely that first one. He straight up told us to sue him and he wasn't paying. He's agreed to pay this morning after my last email
Ryan » Mawji
Glad you got it resolved. Best of luck
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