Solved: Need Ad Agency that takes Percentage of Ad Profit

Hi there,

Thanks for reaching out! Really appreciate you getting in touch. I've had a look at what you've sent over and it's a situation I've seen quite a few times before. Someone's got the ball rolling with their own Meta ads, they're seeing some decent results which is great, but now they're at that point where they're thinking "right, what's next? How do I get to the next level?". It's a good problem to have, means you've built something that works.

I also totally get your hesitation about agencies and the whole fee structure thing. You're right, there are alot of horror stories out there, and it's smart to be cautious. Your idea about a performance-based fee, like a percentage of profit, makes a lot of sense on the surface. It seems fair that if an agency does well, they get rewarded, and it definately should push them to do better. I wanted to give you some of my thoughts on that, and then walk you through how I'd typically approach scaling an account like yours, so you can get a feel for what that "next level" actually involves. Hopefully, this'll give you a bit of clarity and some solid, actionable stuff you can think about.

We'll need to look at the agency model and what works...

Right, so let's tackle the elephant in the room first: the performance-based fee. While it sounds like the perfect solution, from an agency perspective it's a bit of a minefield, which is why you dont see it very often. The main issue is that ad performance is only one piece of a much bigger puzzle. We can send the most targeted, highest-quality traffic in the world to a website, but we can't control what happens after they click.

The final profit depends on so many things outside of our remit: your product margins, your website's conversion rate, your shipping costs, customer service, return rates, the overall brand perception. If we were to take a cut of the profit, we'd need a say in all those things, and we'd basically be business partners at that point. It gets messy very quickly. For instance, if a website is slow to load or the checkout process is clunky, the conversion rate will suffer, and no amount of ad magic can fix that. That's a web development issue, not an ads issue. Or if the product pricing isn't quite right for the market, that impacts sales. It's why most reputable agencies seperate the fee for their service from the ad results themselves.

What you're really looking for is not a specific payment model, but a partner you can trust. The trust issue is the real core of it. You want to know that the money you're paying is going to be well spent by people who know what there doing. So how do you figure that out before you sign on the dotted line? I'd say there are a few much better ways to vet an agency.

First, take a really good look at their case studies. And I mean a really good look. Don't just glance at the headline numbers. Do they have experience in your niche, or a similar one? Are they transparent about the platforms they used? I remember one campaign we ran for a subscription box client where we got them a 1000% Return On Ad Spend on Meta. We wrote up exactly how we structured the campaigns. That's the kind of detail you want to see. It shows they're not just plucking numbers out of thin air. You've got to be realistic, of course. If you're in a super competetive niche, the results might not be as stratospheric, but a solid case study shows they have a process that works.

Second, get on a call with them. Book that free consultation or initial audit that most good agencies offer. This is your chance to grill them. Ask them specific questions about how they'd approach scaling your account. If they give you vague, fluffy answers, that's a red flag. If they start digging into your account, asking about your audiences, your creative, your funnel, and give you some genuinely useful, immediate advice... that's a cracking sign. It gives you a taste of their expertise. Tbh, this initial chat is where you can tell if they're the real deal. If someone asks us for client references after we've done a free, in-depth account review and shown them all our detailed case studies, it's often a sign that the trust just isn't there, and it probably never will be. A partnership has to be built on mutual trust from the get-go.

Finally, check their reviews. What are other clients saying? Are the reviews detailed? Do they sound like real business owners who've had a good experience? All these things together paint a much better picture of an agency's ability than their fee structure does.

I'd say you need to completely rethink your account structure for scale...

Okay, so let's get into the nitty-gritty of how you actually go about scaling. You've got "decent results," which tells me your pixel probably has some good data in it and you've found at least one or two combinations of creative and audience that work. The problem with just running with what works is that if you try to scale it by simply cranking up the budget, things usually break. Ad fatigue kicks in, costs go up, and your performance drops off a cliff. This is quite normal. Your spend will plateau at some point where you can't scale further without a much lower ROAS or higher CPA.

To scale effectively, you need a proper structure. A structure that lets you test systematically, control your budget intelligently, and speak to different types of customers in different ways. The way we almost always do this is by breaking the account down into a funnel structure: Top of Funnel (ToFu), Middle of Funnel (MoFu), and Bottom of Funnel (BoFu).

-> Top of Funnel (ToFu): This is your cold traffic. People who have never heard of you before. The goal here is prospecting – finding new potential customers. Your ads here are all about grabbing attention, introducing your brand, and driving traffic to your site.

-> Middle of Funnel (MoFu): These are people who've shown some interest but haven't taken a high-intent action yet. They might have visited your website, watched a good chunk of your video ad, or engaged with your social media page. They're warm-ish. The goal here is to nurture that interest and get them to take a closer look.

-> Bottom of Funnel (BoFu): This is the hot audience. These are the people who are right on the edge of converting. They've added a product to their cart, initiated checkout, or visited the checkout page but didn't buy. The goal here is simple: get them over the finish line.

By splitting your campaigns like this, you can allocate your budget much more effectively. You can spend more on prospecting (ToFu) to keep feeding the funnel, while running highly targeted, specific ads to your MoFu and BoFu audiences to maximise conversions. It also stops you from showing the same "10% Off!" ad to someone who's never heard of you and someone who left a £200 cart an hour ago. They need different messages.

Here’s a rough idea of what that structure looks like in practice for an eCommerce brand. You can adapt the events for pretty much any type of business (e.g., 'purchased' could become 'lead' or 'signup').

Setting your account up like this is the absolute foundation for scaling. Without it, you're just throwing money at the wall and hoping something sticks.

You probably should get much smarter with your audiences...

Once you have the structure, the next step is to get really sophisticated with your audience targeting, especially at the ToFu stage. This is often the single biggest factor that unlocks scale. Just running ads to broad interests is not enough. You need to test, test, and test again, but you need to test the right things in the right order.

Here's how I'd prioritise audience testing, moving from the highest potential audiences to the broader ones:

#1. High-Intent Retargeting (BoFu): This is your lowest hanging fruit. Audiences like "Added to Cart (7 Days)" or "Initiated Checkout (3 Days)". These should always be running. They are small audiences but incredibly high-converting. You can combine a few of them into one ad set if your budget is smaller (e.g., all checkout/cart actions in the last 14 days).

#2. High-Value Lookalikes: This is where the magic starts to happen for scaling. Don't just create a lookalike of "All Website Visitors." That's too broad. The quality of your source audience is everything. You want to create lookalikes based on your absolute best customers. Start with a 1% lookalike of:

• -> A customer list of your highest lifetime value customers.
• -> Your list of all previous purchasers.
• -> Your pixel "Purchase" event (from the last 180 days).

These audiences are powerful because you're telling Meta, "go and find me more people who look exactly like the people who already give me money." It's the most powerful signal you can give them. I remember we had a client in the medical recruitment space, and by switching from broad interest targeting to lookalikes of successfully placed candidates, we managed to reduce their Cost Per Acquisition from £100 right down to just £7. It was a complete game-changer for them.

#3. Lower-Intent Lookalikes: Once you've tested the top-tier lookalikes, you can move down the funnel. Create lookalikes of people who "Added to Cart" or "Initiated Checkout." These are still strong signals and can often find pockets of new customers.

#4. Niche Interest Targeting: This is your bread and butter for finding new audiences when your lookalikes are starting to fatigue. The mistake most people make here is going too broad. Say you're selling high-end coffee equipment. Targeting an interest like "Coffee" is useless. You'll hit everyone from students drinking instant coffee to people who just like the smell of it. Instead, you need to get specific. Think about the brands, magazines, influencers, or tools that only your ideal customer would be interested in. Things like "James Hoffmann," "Baratza," or "Comandante Grinder." The audience size will be smaller, but the quality will be infinitely higher because you're filtering out the irrelevant masses.

#5. Broad Targeting: This is something you only do once your account is very mature and your pixel has thousands and thousands of conversion events. At that point, you can sometimes just remove all targeting (except for age, gender, location) and trust Meta's algorithm to find the right people. But you need a huge amount of data for this to work well, so it's one of the last things to test.

A systematic approach to testing these audiences within your new ToFu campaign is how you'll find new, scalable pockets of customers.

You'll need a relentless creative testing process...

So you've got your structure and your audiences. The final piece of the scaling puzzle is creative. When you increase your ad spend, you show your ads to more people, more often. This means they get tired of seeing the same ad much, much faster. This is ad fatigue, and it will kill your campaign performance if you're not prepared for it.

You can't just find one winning ad and ride it forever. To scale, you need a creative system. You need to be constantly testing new ideas, new formats, and new messages to find the next winner before the current one dies out. This is not about making tiny tweaks like changing the button colour. It's about testing fundamentally different approaches.

Here's a few things to think about for your creative:

-> Test Different Angles: Don't just talk about your product's features. Test ads that focus on the problem it solves. Test ads that feature customer testimonials. Test ads that show the 'before and after'. Test ads that highlight your brand's story or mission. Each of these is a different angle that might resonate with a different segment of your audience.

-> Test Different Formats: Don't just run image ads. Test them against video ads. Test them against carousels. Test them against User-Generated Content (UGC). We've had several B2B SaaS clients, a notoriously difficult niche, see fantastic results with simple, authentic-looking UGC videos. One client got over 1500 trials just by switching from polished corporate videos to lo-fi videos of their customers talking about the software.

-> Think About Your Offer: Sometimes, the biggest lever you can pull isn't in the ad itself, but in the offer you're making. I've looked at B2B websites before where they're trying to sell a complex bit of software with just a "Buy Now" button. It never works. They're missing the offer. Could you offer a free trial? A free demo? A free guide or checklist? A small tweak to your offer can dramatically improve conversion rates, which in turn lets you bid more aggressively and scale faster. A better offer makes your ads more effective.

Scaling isn't a one-time thing; it's an ongoing process of optimising structure, audiences, and creative. It requires diligence and a systematic approach.

This is the main advice I have for you:

This is a lot to take in, I know. So to boil it all down, here's a table of the main recommendations and actionable steps I'd suggest you think about to take your ads to that next level you're aiming for.

As you can probably tell, this is a lot more involved than just boosting a few posts or increasing the budget on what's already running. It's a strategic shift. It's about moving from just running ads to building a predictable, scalable customer acquisition machine. It takes time, expertise, and a lot of testing.

And that, really, is where working with a specialist can make a huge difference. It's not just about saving you time (though it does that too). It's about having someone who has done this hundreds of times before, who knows the pitfalls to avoid, and who can implement a sophisticated strategy like this efficiently and effectively. We can bring insights from dozens of other accounts and campaigns, like knowing that a UGC-style video might outperform a polished ad, or that a Lookalike of high-value customers is the best place to start scaling.

It's about having a team dedicated to poring over your data, building out new tests, and constantly optimising every part of the funnel to squeeze out more performance. This is what it takes to get to the next level.