---
title: "Before You Sign a Performance-Based Ads Deal, Check Who Gets Paid When Costs Rise"
description: "A letter to the founder weighing a performance-based Google Ads proposal: test the fee against rising spend, define the results that count, and put the target and miss clause in writing."
url: "https://groas.com/post/an-open-letter-to-the-founder-about-to-s"
image: "https://pub-87da24ecbbfc4c3bad6875f3aa013712.r2.dev/generated-images/6e373828-208e-4e4e-90e0-d2e800fedb60.png"
published: "2026-10-13T05:19:54.501Z"
modified: "2026-10-13T15:41:27.590Z"
---

October 13, 2026 · 10 min read

# Before You Sign a Performance-Based Ads Deal, Check Who Gets Paid When Costs Rise

[Alexander PerelmanHead Of Product @ groas](https://groas.com/author/alexander-perelman)[LinkedIn](https://www.linkedin.com/in/alexander-433793253/)

![Cartoon: a founder pours cash into an ad machine that yields three customers, while coins gush into a grinning agency rep's hat: "Great month — you spent more!"](https://pub-87da24ecbbfc4c3bad6875f3aa013712.r2.dev/generated-images/6e373828-208e-4e4e-90e0-d2e800fedb60.png)

In this article

1. [Test the fee when spend rises and CPA gets worse](#test-the-fee-when-spend-rises-and-cpa-gets-worse)
2. [Test what they call a result](#test-what-they-call-a-result)
3. [Test what happens when you leave](#test-what-happens-when-you-leave)
4. [Put the target before the fee](#put-the-target-before-the-fee)
5. [Send these three questions before you sign](#send-these-three-questions-before-you-sign)

If you are the founder with a performance-based ads proposal open in another tab, look past the phrase “skin in the game.” **If the manager earns more when you spend more, but not when you acquire customers more cheaply, the deal is not as aligned as it looks.**

I know why you want to believe it is. You are spending, say, $20k a month, and you are tired of paying a manager more every time the budget goes up. The new offer says you will pay for results instead: a cut of revenue, perhaps, or a set price per acquisition. It sounds like the manager finally takes the same risk you do. I used to tell clients that kind of deal was progress. I was wrong to treat the label as proof.

A percentage-of-spend proposal makes the problem easy to see. Say the deck quotes 15%. On $20k of ad spend, that is $3,000 a month in management fees, separate from the media you pay Google. At $100k, it is $15,000 for the same percentage ([typical management rates](https://blog.applabx.com/google-ads-agency-pricing-models-explained/)). If your budget rises because a campaign finally works, the invoice rises with it, whether or not the management work changes. I have watched that happen inside accounts where the only change that month was a higher budget cap.

Minimums can rewrite the quote underneath you, too. A 15% pitch with a $1,000 minimum on $3,000 of spend is not a $450 fee. It is an effective 33.3% ([minimum-fee math](https://blog.applabx.com/google-ads-agency-pricing-models-explained/)). The same question applies to software priced on connected spend. One enterprise suite charges a percentage of total connected spend, not just what runs through the tool, with reported contracts at $100k to $300k ([reported Smartly contracts](https://hunchads.com/blog/smartly-pricing/)). On a $2M account at 3%, that is $60,000 a month even if only $300k actually touches the platform ([connected-spend example](https://hunchads.com/blog/smartly-pricing/)). Before you sign, ask which spend counts. Get the answer in the fee clause.

Revenue share hides the problem better. Its invoice does not necessarily climb when spend climbs; it climbs when _attributed revenue_ climbs. That distinction matters, but it does not make every attributed sale a sale the manager created. Brand search can account for [20 to 50% of tracked search sales](http://searchengineland.com/ppc-and-your-good-name-sales-from-brand-searches-arent-incremental-10825). Someone typing your name may already know exactly where they want to buy. If the contract pays on every campaign-attributed sale, you can hand over a cut of demand you earned before the campaign touched it. I learned this running brand and non-brand in the same account. Non-brand did the hard work. Brand took the credit. A revenue-share invoice can do the same.

That is why revenue share is rarely a discount by default. When the brand grows, the founder can pay more in total than a retainer would have cost ([risk-transfer tradeoff](http://ecommercefastlane.com/top-10-revenue-share-marketing-agencies/)). You may be buying downside protection, not cheaper marketing. The clause that decides what you bought is the definition of revenue. If the deal is meant to reward new growth, ask for incremental revenue above an agreed, dated baseline rather than everything the platform attributes. Seasonality makes baseline disputes especially painful ([baseline definition warning](http://ecommercefastlane.com/top-10-revenue-share-marketing-agencies/)). **If they will not put the baseline in writing, they are not sharing that risk with you.** They are renting your upside.

CPA pricing looks cleaner, and it is closer to what you care about. You pay per acquisition instead of per dollar spent. But ask who defines an acquisition and who keeps any efficiency gain. At a $100 flat CPA, if the shop buys at $40 actual CPA, it keeps $60 per user; your agreed price does not fall just because its buying improves ([how CPA arbitrage keeps the gain](https://medium.com/@kelrabiey/how-marketing-agencies-rip-off-their-clients-with-cpa-pricing-2eb0b50e7dd0)). Testing can also put its margin at risk, even when the test might teach you something useful. I used to defend flat CPA as alignment. I was wrong. It aligns you both on volume at the agreed price, not necessarily on lowering _your_ price.

## Test the fee when spend rises and CPA gets worse

Run the proposal through one stress test tonight. Spend doubles next quarter because demand spikes, and CPA drifts up 30% because the extra volume is weaker. Under percentage of spend, who gets paid more? The manager does. You spent more for worse efficiency, and the fee went up. That row of math tells you whether the deal rewards cheaper acquisition or simply follows a bigger budget.

Ask for the calculation at your spend level, not a chart showing how the model performs when everything goes right. What happens to the fee in the bad month, when you need the manager’s judgment most? If you want a side-by-side example, this [$20k Google Ads test of percentage of spend versus pay per acquisition versus flat fee](https://groas.com/post/percentage-of-spend-vs-pay-per-acquisiti) lays out monthly and year-one costs. Use it to frame your question, then make the shop calculate _your_ proposed terms.

## Test what they call a result

Now try a different bad month: the dashboard shows conversions up, but your pipeline does not close. This is where founders get burned, and it took me two bad SaaS quarters to see it clearly. Cost per lead looks fine. Then sales tells you the leads are students, job seekers, and three companies with twelve employees who will never buy. The agency invoice still counts every form fill because the contract defines a conversion as whatever Google counted.

If you are B2B, **the conversion definition is the deal**. Payment tied to raw leads gives the manager a reason to find more form fills. If you need qualified pipeline or closed-won revenue, say so in the contract and decide how you will reconcile the ad account with your CRM. That is the standard I hold now: optimize toward SQLs and revenue, never form fills dressed up as progress.

Ask them, in writing: What counts as a conversion? Who excludes junk, and how quickly? What happens with brand searches, returning customers, and invalid leads? Are there clawbacks? If the answers live in a slide instead of the contract, assume you will argue about them after the invoice arrives. A longer version of this argument is here: [Should your search partner take a cut of revenue](https://groas.com/post/should-your-search-partner-take-a-cut-of). Skim it before your call. The baseline and attribution clauses are where the nice phrase “revenue share” acquires an actual meaning.

![A magnifying glass over the fee clause of an advertising contract](https://pub-87da24ecbbfc4c3bad6875f3aa013712.r2.dev/generated-images/5d26445d-cc33-4b01-a097-c4d8b61d51c6.png)

## Test what happens when you leave

Third test: you want to leave in month four. This is the clause you are most likely to skip because the kickoff call felt friendly. Do not let the account setup become a question you first ask during an exit. Google Ads distinguishes between account ownership and a manager’s linked access; the arrangement depends on how the accounts are set up and what permissions are granted ([how Google Ads account ownership works](https://support.google.com/google-ads/answer/7456532)). Confirm the setup while everyone still likes each other.

You need to know whether you can retain your account, history, negatives, audiences, and conversion data when the relationship ends. Ask for the account to sit under your control, with admin access on your side and the manager working through linked access you can remove. Then check that the setup matches the contract. The promise “of course it is your account” is not a substitute for either.

**Takeaway for tonight:** get account control and exit access in writing before you pay. The friendly call will be a poor place to settle an ownership dispute four months from now.

![An office doorway with an agency contract on the floor](https://pub-87da24ecbbfc4c3bad6875f3aa013712.r2.dev/generated-images/57de90ba-f6e8-4c2a-9f55-17f3341dd168.png)

## Put the target before the fee

Here is what I would demand instead. Start with a number in writing before you pay. Not “more sales.” Not “growth.” Not “improvement.” Name the outcome, the 90-day window, and the dated baseline you will measure against. The proposal might say 40% more sales and leads, or 40% more visibility, depending on what you are buying. If qualified pipeline is what matters to you, do not quietly substitute a lead count. Agree on what the number means before anyone starts celebrating it.

Most performance deals lead with the percentage they take and leave the result vague. Flip that order. Name the result first. Fix the fee second. Then write down what happens if the result misses. Otherwise, you have a price and a hope, which is a familiar enough agency product.

The cleanest version I have seen is a fixed fee tied to a written target, with free work if the target is missed. groas offers it as a one-time [90-day sprint](https://groas.com/for-businesses) for ads, for SEO and AI search, or for both, at one flat fee paid once up front and quoted on the fit call. If the 40% target is not hit, the team keeps working for free until it is. I like the structure because a higher ad budget does not automatically raise the management fee, and missing the agreed result costs the provider more work rather than costing you another fee. That is a better incentive than charging more as spend rises. It is not a promise that CPA will fall under every target; if cheaper acquisition is your goal, make that part of the written measure.

Hear the tradeoffs plainly, too. You pay up front. You have to accept the baseline audit. And 90 days is the commitment even if week three feels slow. I would rather put those terms on the table than pretend that calling a fee “performance-based” makes its incentives disappear.

I should also be straight about when I would still sign a percentage deal. This structure will not fit everyone. If you spend $3,000 a month, a flat $3,000 management fee is absurd, and 15% of spend is $450. Take the cheaper percentage deal, keep the term month to month, and revisit it as spend grows. If you genuinely need downside cover for a launch, a revenue-share shop that gets paid only when cash registers ring can make sense for eight weeks while you prove the offer, provided the baseline is in writing and brand is excluded. You may pay extra for that insurance. Just know you are buying insurance, not efficiency.

The trap is staying after the deal works. I stayed too long once with a home services client because the reporting looked tidy and nobody wanted the awkward call. Spend crept from $18k to $34k, CPA crept up $11, and the fee nearly doubled while cost per booked job got worse. **The fee grew because the budget grew, not because the buying got better.** Tape that sentence to the proposal. If you want the full math on CPA pricing and how the models behave at $20k spend, read [who charges on CPA instead of ad spend](https://groas.com/post/who-charges-on-cpa-instead-of-a-percenta) before you reply.

## Send these three questions before you sign

Tonight, send one short email. Ask for the answers as contract language, not deck language. How they reply tells you more than another page about their “process.” You are not being difficult. You are asking to pay for cheaper customers, qualified growth, or whatever result your business actually needs, rather than a larger invoice.

1. **If my spend doubles and CPA rises 30%, what do I pay you?** Show me the math at $20k and $40k of monthly spend. If the fee doubles while efficiency gets worse, I want to see that before I sign.
2. **What counts as a result, and what is excluded?** Define the conversion, brand-search and returning-customer exclusions, the dated revenue baseline, and how invalid leads are credited back. If I need qualified pipeline, put that phrase in the agreement and reconcile it against my CRM.
3. **If I leave in month four, what do I keep?** Confirm where the ad account, history, audiences, negatives, and tracking live, who holds admin access, and how I remove your manager access.

Do not pay a premium for growth you already earned.

P.S. One line in your reply matters more than the rest: ask them to put the target and the miss clause in the same sentence. For example: 40% more qualified pipeline in 90 days from this baseline, or we work for free until it hits. If they will write the number but not the consequence, they have told you which part of the deal they believe in.

— Alexander

## Frequently Asked Questions

### What happens to a percentage-of-spend agency fee when my ad budget increases?

The fee rises with the budget, whether or not the management work changes. At 15%, a $20k monthly budget costs $3,000 in management fees, and the same percentage on $100k of spend costs $15,000, separate from the media you pay Google.

### How does a minimum fee change the effective percentage I pay an ad agency?

A 15% pitch with a $1,000 minimum on $3,000 of spend is not a $450 fee; it works out to an effective 33.3%. Before signing, ask which spend counts and get the answer in the fee clause.

### Why can a revenue-share ads deal make me pay for demand I already had?

Brand search can account for 20 to 50% of tracked search sales, and many of those people already know where they want to buy. If the contract pays on every campaign-attributed sale, you hand over a cut of revenue the campaign did not create.

### Is revenue share pricing a discount compared to a flat retainer?

Not by default. When the brand grows, the founder can pay more in total than a retainer would have cost, so the deal may be buying downside protection rather than cheaper marketing. Ask for incremental revenue above an agreed, dated baseline and get that baseline in writing.

### If my agency buys traffic cheaper than the flat CPA we agreed, who keeps the savings?

The agency keeps the difference. At a $100 flat CPA, a shop buying at $40 actual cost per acquisition keeps $60 per user, and your agreed price does not fall just because its buying improves. Flat CPA aligns both sides on volume at the agreed price, not on lowering your price.

### What should a B2B founder check about how an agency defines a conversion?

The conversion definition is the deal. If payment is tied to raw form fills, the manager has a reason to chase volume over quality, so define qualified pipeline or closed-won revenue in the contract, decide how to reconcile the ad account with your CRM, and agree in writing who excludes junk leads and how quickly.

### Who should own the Google Ads account, me or the agency?

The account should sit under your control, with admin access on your side and the manager working through linked access you can remove. That way you retain the account, history, negatives, audiences, and conversion data if you leave, and you should confirm the setup matches the contract before you pay.

### How should a performance-based ads deal be structured so the result comes before the fee?

Name the outcome, the 90-day window, and the dated baseline in writing first, then fix the fee, and write down what happens if the result misses. If the provider will write the number but not the consequence, that shows which part of the deal they believe in.

## Pay For Results, Not For Hours

Businesses buy the outcome, agencies resell it, and groas answers for it either way.

[See If You Qualify](https://groas.typeform.com/to/xC1bQNUT)

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