Either can work. What matters more is who Google bills, whose name the account is in, and what is written down before you sign.
If Google bills your card, the media invoice sits in your own account. You can read it any time, see exactly what was spent and on what, and you never need to ask anyone for a screenshot. If the agency pays Google and bills you back, you are trusting a number on someone else's invoice, and the agency is holding your ad account, which becomes a problem the day you leave.
Whatever the arrangement, the ad account should be in your name. Not migrated to you later. Yours from the first day.
A bigger ad budget is more work: more pages under test, more search terms to comb, more calls to track. So most agency fees rise as the spend rises, and that is fair. What matters is that you see how before you sign, in plain numbers, and that nothing about it changes without a conversation. Ask any agency you are talking to for that in writing.
Inside the retainer means one number a month, and the split between work and media is set before you sign, based on what your market costs. It is simpler to budget and it removes the surprise of a media invoice arriving beside the fee. The risk is that a bad agency starves the media to protect its margin, so the split has to be written down and visible.
On top means the fee and the media are separate lines. It is more transparent by default, and it is easier to compare agencies on fee alone. The risk is that the media number creeps, month after month, because nobody has a reason to hold it.
Both can be honest. Both can be abused. The written split and the written fee are what make either one safe.
Insist on three things whichever way it is structured: Google bills your card, the account is in your name, and the fee is written down before you sign. With those in place, inside or on top is a bookkeeping preference. Without them, it does not matter which you pick.
Vander Els Partners