"We do not know which ad management agency to choose"—this is the greatest concern for companies outsourcing ad operations for the first time. If you make the wrong choice, you not only waste a monthly ad spend of ¥300,000, but opportunity losses also occur due to a lack of operational skill.
In this article, we explain how to choose an ad management agency without failing across 10 checkpoints, compiling essential information prior to ordering—including concrete methods for comparing estimates and key contract precautions.
Overview of ad agencies
4 types of ad agencies
| Type | Features | Price range | Suitable Companies |
|---|---|---|---|
| Major full-service agency | Comprehensive media coverage; large-scale operations | Fee rate: 10–15% | Monthly ad spend of ¥3,000,000 or more |
| Mid-sized performance agency | High operational quality as a core strength | Fee rate: 15–20% | Monthly ad spend of ¥500,000–¥5,000,000 |
| Freelancer / Boutique agency | High flexibility; low cost | Fee rate: 10–20% | Monthly ad spend of ¥300,000–¥1,000,000 |
| In-house operating team | Operated internally | Labor costs only | Monthly ad spend of ¥1,000,000 or more |
The best fit for small and medium-sized businesses is a mid-sized performance agency or a trusted freelancer.
10 checkpoints to avoid failure
1. Years of operational experience and track record
What to verify:
- Years since agency establishment
- Years of operational experience of the person in charge
- Cumulative number of client accounts managed
- Track record in your specific industry
Evaluation criteria:
- Established for at least 3 years, with the account manager having at least 3 years of experience as a baseline
- A track record in the same industry is a major advantage
- Managing 50 or more client accounts indicates accumulated know-how
2. Fee structure transparency
3 pricing models:
- Percentage fee: 15–20% of ad spend (most common)
- Fixed fee: Flat rate of ¥50,000–¥150,000 per month
- Performance-based: Tied to conversions or sales revenue
Points to note:
- Fee rates under 10% raise concerns regarding operational quality
- Minimum contract periods of 12 months or more should be avoided
- Always confirm the presence of initial setup fees (typically ¥50,000–¥300,000)
3. Account manager skill
Questions to evaluate competence:
- Do they hold Google Ads and Yahoo! Ads certifications?
- Can they specifically explain past management cases (both successes and failures)?
- How well do they understand your industry and product/service?
- Do they have established ad management frameworks (rather than relying on individual guesswork)?
Red flags:
- Guaranteeing that "results are certain"
- Inability to discuss specific figures (CPA, CVR, ROAS)
- Giving vague answers to questions
4. Reporting content and frequency
Characteristics of a good report:
- Monthly reports at a minimum (weekly availability is even better)
- Clear presentation of KPI achievement rates
- Concrete improvement measures clearly stated
- Clear operational policy for the following month
Characteristics of a poor report:
- Merely listing raw figures like ad spend and clicks
- No improvement proposals, or identical suggestions every month
- A generic template that reads like a promotional flyer for their own media
5. Media channels covered
Media to check:
- Google Ads (Search, Display, YouTube, Shopping, Performance Max)
- Yahoo! Ads
- Facebook / Instagram Ads
- LINE Ads
- TikTok Ads
Selection points:
- Can they manage the platforms where your target audience is present?
- Can they formulate a cohesive cross-channel strategy across multiple platforms?
6. Creative production capability
Ad operations and ad creatives go hand in hand. Even if you delegate operations, you will not see results if the creative is weak.
What to verify:
- Can they produce banner images?
- Do they offer production and optimization proposals for landing pages (LPs)?
- Can they handle video creatives?
- Are creative production fees billed separately? (¥10,000–¥50,000 per asset)
7. Contract duration and cancellation terms
What to verify:
- Minimum contract period (3, 6, or 12 months)
- Cancellation notice period (typically 1 to 3 months in advance)
- Presence of early termination fees
- Account ownership (your company or the agency)
Points to note:
- Beware of minimum contract periods of 12 months or longer
- Ensure the ad account is owned by your company (to prevent future transfer disputes)
8. Communication frequency
What to verify:
- Frequency of regular meetings (monthly is minimum; weekly is best)
- Availability of chat support via Slack, Teams, etc.
- Response speed during emergencies
- Frequency of account manager turnover
9. Past case studies
What to verify:
- Specific case studies demonstrating improvements in CPA, CVR, and ROAS
- Track records broken down by industry
- Failed cases and the lessons learned from them
Evaluation criteria:
- Agencies that can present concrete figures are trustworthy
- Be wary of agencies that refuse to share any case studies citing "confidentiality"
10. Proposal quality beyond pricing
Characteristics of excellent agencies:
- Proposing improvements not only for CPA, but extending to LP optimization and sales process refinement
- Proposing integration with non-advertising marketing channels (SEO, social media, etc.)
- Strategic proposals designed with your overall business growth in mind
Specific methods for comparing estimates
Step 1: Prepare a requirements definition document
Contents to include in the requirements definition:
- Business overview and product/service details
- Objectives (conversions, revenue, brand awareness, etc.)
- Target KPIs (CPA, CVR, ROAS)
- Upper limit of monthly budget
- Preferred advertising platforms
- Status of existing ad accounts
Step 2: Request competitive estimates from 3 to 5 agencies
Provide the same requirements definition document to each agency to solicit estimates.
Standardize the quotation items:
- Initial cost
- Monthly management fee
- Creative production costs
- Other expenses (reporting fees, direction fees)
Step 3: Create an estimate comparison table
| Item | Agency A | Agency B | Agency C |
|---|---|---|---|
| Initial cost | ¥150,000 | ¥100,000 | ¥200,000 |
| Monthly management fee | 20% of ad spend | Fixed at ¥100,000/month | 15% of ad spend |
| Creative | Additional fee | Includes 5 assets/month | Includes 3 assets/month |
| Minimum contract period | 6 months | 3 months | 12 months |
| Manager experience | 5 years | 3 years | 8 years |
| Industry track record | Available | None | Available |
Step 4: Choose based on "overall evaluation" rather than "lowest price"
In ad agency selection, choosing solely on price leads to failure. Make an overall decision based on the following criteria:
- High level of operational skill (most important)
- Compatibility with the account manager (communication)
- Proposal capability
- Reasonableness of fees
- Flexibility of contract terms
5 items to always check at contract time
1. Account ownership
Mandatory: Ensure your company owns the advertising account. If the agency owns it, you risk losing historical operational data and performance history upon contract termination.
2. Data handover
Verify: Confirm whether operational data, reports, and creative assets will be handed over when the contract ends.
3. Sharing of operational activities
Verify: Confirm whether you have real-time access to the ad account. This is essential to prevent operations from becoming a black box.
4. Presence of additional fees
Verify: Confirm whether additional costs arise for creative production, LP optimization, specialized analytics, etc.
5. Report customization
Verify: Confirm whether reporting formats can be customized to suit internal reporting requirements.
Frequently asked questions (FAQ)
Q. Which is better: a major agency or a small-to-mid-sized agency?
A. Base your decision on the scale of your ad spend.
- ¥3,000,000+ per month: Major agencies (economies of scale)
- ¥500,000–¥3,000,000 per month: Mid-sized performance agencies (best cost-performance)
- ¥300,000–¥500,000 per month: Freelancers or boutique agencies
- Under ¥300,000 per month: In-house management or flat-fee agencies
Q. Can performance-based agencies be trusted?
A. Exercise caution. In performance advertising, "100% guaranteed results" do not exist. Agencies promoting performance-based models carry the following risks:
- Disproportionate focus on short-term gains (compromising long-term quality)
- Performance benchmarks set artificially low for risk hedging
- Complex and opaque compensation calculations
Q. Does the assigned account manager ever change after signing the contract?
A. It happens frequently. Highly capable managers are often recruited away or leave to start independent ventures. When executing the contract, confirm how manager changes are handled. Ideally, include a clause such as "conducting an introductory handover meeting with the successor whenever the manager changes."
Q. If we increase our monthly ad spend, does the management fee increase as well?
A. Under a percentage-fee model, yes. It scales proportionally: for example, ¥300,000 ad spend (¥60,000 fee) → ¥1,000,000 ad spend (¥200,000 fee). However, as ad spend grows, you can often negotiate a lower fee rate, so be sure to renegotiate terms when scaling up.
Q. What should we keep in mind when terminating an ad agency contract?
A. Execute the following steps in order:
- Check the cancellation notice period (typically 1 to 3 months prior)
- Verify account ownership and access permissions
- Export operational data and historical reports
- Retrieve creative assets and source files
- Establish a transition plan to a new agency or in-house team
Q. Are there other options besides dealing directly with agencies?
A. Yes. You can use matching services.
- EMEAO (Matching tailored for executives)
- Web Kanji (General web production and digital services)
- Aggregators such as Wakka Inc.
These platforms make it easier to gather quotes from multiple vendors, proving effective during the initial comparison phase.
Summary: Choose carefully and build a long-term relationship
An ad agency engagement is a long-term partnership once established. Rather than deciding based on price alone, evaluate candidates comprehensively using the following criteria.
Checklist (Permanent Reference):
- Established for 3+ years; manager has 3+ years of experience
- Transparent fee structure
- Minimum contract period of 6 months or less
- Account is owned by your company
- Able to discuss specific case improvements
- Monthly reports include proactive improvement proposals
- Capable of handling creative production
- Good personal chemistry with the account manager
- Clear terms regarding additional charges
- Proactive suggestions for integration with other channels (SEO, social media)
While agencies meeting all 10 criteria are rare, you can consider an agency trustworthy if it satisfies 7 or more items.
Related articles
- Paid Search Advertising Cost Guide: Benchmarks for Monthly Budgets and Management Fees — Detailed cost breakdown
- Complete Guide to Google Ads Costs — Comprehensive explanation of Google Ads
- How to Choose a Web Development Agency: 5 Points to Check When Comparing Estimates — Related vendor selection topic
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