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Based on this description, it sounds like your agency does not have experience managing ads for your type of business.
PPC is very competitive and just because someone has experience running campaigns for roofers or hvac doesn’t always mean they can run a profitable campaign for a fencing contractor.
If I were you, I’d start looking for an agency with experience in your vertical. If you really want to make things work with this agency, it is fair to ask for a discounted rate or fee waiver until you start getting qualified leads.
One important note is if your sales team is waiting days to call leads back, that can also produce a very low contact rate similar to what you described, but it does not explain the out of service area leads. Assuming the leads are being called quickly, your agency is falling short.
