A percentage of the advertising budget sounds fair. But it rarely is. Most agencies earn 10 to 20 percent of the ad budget you spend through them. The more you spend, the more they earn. This is called performance-aligned. I call it a structural conflict of interest.
What "percent of donation" means in practice
With a monthly budget of €5,000, the agency margin is around €750. At €10,000, it's €1,500, and at €20,000, it's €3,000. In this model, who has an incentive to save money? If a campaign isn't performing, the recommendation is almost always: more budget. Rarely are poor tracking, incorrect targeting, or an overly broad target audience considered.
This doesn't mean that every agency acts this way. It means that the model makes precisely this recommendation more likely, regardless of whether it's factually correct.
What you should pay attention to instead
How someone is compensated influences what they recommend to you.
A fixed price or retainer model separates the fee from the media budget. Those who are paid regardless of how much money flows through the platform have no built-in incentive to increase their budget if the structure itself is the problem. Freelancers often work this way, but not automatically; there are also freelancers with revenue sharing and agencies with fixed prices. Ask specifically about the fee model, not the company size.
What this means for your selection
Neither an agency nor a freelancer is inherently the better choice. The crucial factor is whether the person is responsible for your pipeline or merely for account activity. Don't ask how many hours were spent on the account or how many optimizations were run last week. Ask what the person or team is actually accountable for.
Frequently Asked Questions
Are percentage-of-donation models inherently dubious?
No, but they do create a structural incentive that doesn't always align with your interests. The crucial question is whether additional controls, such as clear targets or independent reporting, offset this incentive.
Is a freelancer automatically cheaper than an agency?
Not necessarily, but freelancers usually have less overhead and can therefore often offer lower entry prices with the same senior experience.
How can I recognize a fair compensation model?
It is designed to be independent of the media budget, usually as a fixed price or retainer, and makes someone responsible for pipeline metrics, not for activity in the advertising account.
Should I address the compensation model directly in the initial consultation?
Yes. It's one of the most revealing questions you can ask, and every reputable provider will answer it without hesitation.
Related: What you're really buying when you hire an agency and Cost per Lead in B2B.
My own model is deliberately designed to be independent of the media budget. More on this in our free whitepaper on B2B lead generation, or directly in Analysis call.