Agency wants $26,700 a month with a 90 day termination clause

Question

Numbers on the table from an agency proposal I'm reviewing. $6,000 monthly retainer, 15% of media spend, $18,000 media spend. That's $26,700 out the door monthly. Their own case-study math says 45 leads and 1.2 signed purchase contracts a month, so roughly $593 per lead and $22,250 per contract.

At a $30k average spread that's a workable but thin business, and the entire thing rests on the 1.2 holding. What worries me more is the paper. Ninety day termination with no cause provision, the Google Ads and Meta accounts live under their manager account, and "qualified lead" is defined as "a prospect meeting client's stated criteria as determined by agency." There's also a non-compete radius that stops them working with another buyer in my counties, which sounds like a benefit until I read that it lapses if I fall below $12,000 monthly spend.

What do I redline first, and what am I not seeing in the numbers?

Rena Expert · Accepted Answer

Redline the lead definition before the termination clause, because it's the one that changes the invoice. "As determined by agency" makes the counterparty the judge of its own performance. Replace it with objective criteria you can audit from the call log: the caller owns or controls the property, the property sits inside your defined geography, the call exceeded some duration, and the caller stated an intent to sell within a stated window. Add a dispute mechanism with a deadline, something like 10 business days to flag a lead, credited against the following invoice. Without that, your $593 per lead is a number the vendor controls.

Account ownership next. Insist the Ads and Meta accounts are created under your business entity and linked to their manager account for access, with billing on your card. If they push back citing operational simplicity, the honest reason is usually that portability weakens their retention. The conversion history and search term data in a mature account is months of paid learning, and starting a fresh account after a bad breakup costs you both the data and a re-entry into the learning phase at full click prices.

On your math, 1.2 contracts a month is far too small a denominator to manage against. One good month and one dead month is the normal variance at that volume, and you'll be tempted to fire or double down on noise. Judge it on rolling 90-day cohorts of leads, tracked by lead date rather than close date, because seller leads convert with a lag and monthly close-date reporting flatters whatever happened three months ago.

The spend floor tied to the exclusivity is the trap. It converts a protection into an obligation to keep spending $12,000 in a market that may not support it. Ask for the floor to drop or the exclusivity to survive a reduction for at least one quarter. Also check your state's call recording consent rules with counsel before their center starts recording your prospects.

renee_dubois · Answer

The 90 day no-cause term reads worse when you put it next to their account. If you give notice and they hold the ad account, you have three months of paying full freight while the person controlling the campaign knows they're being replaced. Fix the ownership and the notice period stops being scary.

kevin_lombard · Answer

What's the learning phase mentioned above? I gather a new ad account performs worse for a while, but is that weeks or months?

devon_pierce · Answer

@juniper it's usually a couple of weeks of worse cost per conversion while the bidding algorithm gathers data, but the bigger loss is the negative keyword list. Every account accumulates hundreds of terms you've paid to discover are junk, people searching for house cleaning or Zillow estimates. That list walks out the door with the agency and you pay to rediscover it.

carlos_nunez · Answer

$22,250 per contract against a $30k spread. That leaves $7,750 before you've paid yourself, your acquisitions person, dispo, or anything that falls out of contract. What's the fallout rate baked into their 1.2? If it's contracts signed rather than deals closed, and a third die at title or inspection, your real cost per closing is over $33k and the model is upside down.

laurenkim53 · Answer

Ask them where the 1.2 came from. If it's a case study from a different market with a different buyer's follow-up team, it's their conversion, not yours. Same leads, half the speed to call, and that number halves.

samantha_ruiz · Answer

@quarry is on the thing I'd fight about. I'd want signed-to-closed defined in the agreement's reporting, even if the agency isn't paid on it, so at least you're both looking at the same funnel.

On the exclusivity floor, I'd also ask what "another buyer" means. Does it stop them running a wholesaler in the next county over whose ads outbid mine on the same keywords? Geographic exclusivity written loosely doesn't stop keyword competition from their own client roster.

megan_doyle15 · Answer

Naive question given the sums here, but is $6,000 a month a normal retainer, or is that priced for someone spending $18,000?

tylerbrooks9 · Answer

@rigging retainers scale roughly with complexity, and $6k plus a percentage on top is aggressive. Charging both a fixed fee and a share of spend is double-dipping the same work. I'd push for one or the other, or a retainer that credits the percentage against it.

sonia_alvarez · Answer

One more line to look for: indemnification for ad content. If their copywriter puts a fair housing problem or an unsubstantiated claim into a landing page and a regulator or a plaintiff comes calling, most agency agreements I've read put that squarely on the client. Ask who carries errors and omissions coverage and for how much, and get the certificate.

Agency wants $26,700 a month with a 90 day termination clause

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