The biggest red flags are an ad account in the agency’s name, guaranteed results, reports that only show clicks and impressions, long contracts with exit fees, and no clear answer on what the fee buys each month. Any one of these should make you slow down.
Agency-owned accounts mean you lose the history, the keyword data and the conversion tracking when you leave, and you start again from nothing.
Guarantees of a set cost per lead or a number of leads before the agency knows your market are sales lines. Nobody controls the auction.
Watch for pressure to raise spend before tracking proves the current budget works, a senior person who pitches and then disappears, and fees hidden inside ad spend as a markup.
Useful pages
This is one part of a bigger picture. How to choose a PPC agency in the UK covers costs, pricing models, ownership, contracts, tracking and red flags in one place.