Brokerblogger

MERRY CHRISTMAS

I'm taking some time off for the Christmas Holidays to go see friends and family.  I hope you do the same.

But, don't lose your head like the SNOWMAN does when you CLICK ON HIM.

Also, don't light a fire in the fireplace at Christmas, as it could be hazardous to Santa's health.  CLICK ON THE CHIMNEY TO SEE.

SEO "Performance-Based Pricing" = "Pay For Performance" (Part V)

One of the main "crossover" from Traditional Ad Agency to Search Marketing Firm aspects of "Payment By Results" in the Institute of Communications and Advertising's (ICA) "PBR2: Advertising Agency Remuneration Best Practices" is at the bottom of page 17 as the last paragraph for "PBR Philosophy - WIn-Win".  It says: "Upside, results based potential in remuneration allows the Agency to participate in the rewards of Client success and allows the Client to meet the Agency's need for increased remuneration.  Both the Client's management's team and their Agencies share in the same business objectives.  This, in turn, lays the groundwork for a closer partnership that is more likely to broaden into questions of business strategy THAN TO NARROW INTO JUST ANOTHER SERVICE RELATIONSHIP."

After reading many SEO authored articles and related forums for seven or so years, one of their main complaints about SEO clients is that too many of them treat their SEO Consultant as "JUST ANOTHER VENDOR".  This client "bad-incorrect attitude" may even help contribute to "improper expectations", and the lack of timely cooperation in doing the changes to the client's web site that help make for a "win-win' scenario.  Yet, on page 17 under "Conditions For A Successful Partnership" the first requirement is "Clear partnership between the participants, based upon the achievement of defined goals."  A clear and true partnership implies TRUE, SHARED FINANCIAL RISK & REWARD which helps motivate both buyer and seller to both do their part in achieving long term success. 

Right now, the SEO seller mostly takes on only the risk of losing the client, along with the ever present possibility of slow or no payments.  Their reward is "getting their price".  The SEO buyer mostly takes on only the responsibility of "one time" or limited, maintenance, financial rewards even if their rewards are one thousand times greater than the SEO's.  But, at the same time, the SEO buyer also risks a lot of wasted time (which is money) if he gets poor results, along with however many thousands of dollars that he promised to pay the SEO seller for One-time Fee Pricing or 6 to 12 month package pricing.

SEO "Performance-Based Pricing" = "Pay For Performance" (Part IV)

First, I want to say I'm 3 days late in getting to this post due to TypePad being down all day yesterday, and initially waiting for updated information from traditional Ad Agency Associations for this post. 

So, that said, I'd like to repeat what I said in Part II of this series: "Traditional Advertising Agencies have been around a lot longer than 10 years (the age of the Search Marketing Industry), and have much more complicated and less easily accountable media than just the Internet to deal with."  For example, in the Institute of Communications and Advertising's (ICA) "Client/Agency Evaluation Guide to Best Practice with Evaluation Formats" it says on page 13 that traditional ad agencies are responsible for a performance evaluation on Account Management, Creative, Consumer Planning/Research, Production, Media Panning & Buying, Direct/Relationship Marketing, Interactive, Public Relations, Budget and Financial, and Agency Management. 

When you consider the number of different types of media and the brand management responsibilities involved, it is hard for me to see how "Performance-Based Pricing" or "Payment By Results" (PBR) as the ICA calls it can be a truly "win-win" situation, especially in the first year of the agency-client relationship.  This is true in the first year, because outside of internet web analytics, many of the "accountability metrics" used to determine specific remuneration feedback (especially as it relates to "Branding") are not as measurably definitive and instantaneous as good web analytics, in my opinion. 

But, nevertheless, the ICA has specific parameters for their "PBR2: Advertising Agency Remuneration Best Practices", which includes a definition that says maybe only "some part" of the remuneration is PBR.  It's free to non-members, so when you click on "Available Online" it eventually takes you to the PBR2 9/01 Report.  On page 6, the history and benefits are interesting and applicable to SEO remuneration, in my opinion.

SEO "Performance-Based Pricing" = "Pay For Performance" (Part III)

In order to show how the concept of "Performance-Based Pricing" has developed in the Search Marketing Industry, you should see how Paid Placement, which is "Pay For Some Kind of Performance" (Pay Per Click, Action, Lead or Sale) has grown since about the year 2000.  Online search advertisers want you to "CLICK HERE", but some want to "dance" (click on image above to see them dance) by having you take some kind of ACTION that results in a Lead or a Sale.

In my 12/12/05 post I promised to show how Benson P. Shapiro's "Is Performance-Based Pricing the Right Price for You? relates to SEO "Pay for Some Kind of Performance" along the lines of Paid Placement.  This is true, because the online advertising industry first resisted any kind of "Pay For Actions" or "CPA" approach.  This article back in 3/13/01 entitled "Pay For Performance Still Rules" says: "Cost per acquisition is certainly less common, but it's getting there."  The author ends by saying: "The business is just not ready for this on a large scale. But we better watch it, because we live in a capitalist, free-market society, and someone is going provide clients with what they want." 

My opinion is that in 2005 the customer and client want even more POWER in determining how they pay their vendors and consultants, more RECIPROCITY in having open, honest, upfront and good collaborative communication, more PRECISION in the type of results they're paying for, and more ROI RELEVANCE in what they pay for.  These are the principles of Yankelovich Partner's "Concurrence Marketing" that I believe can, and should, be applied to clients and customers as well as consumers.  That said, I still agree with Mr. Shapiro that "Performance-Based Pricing" is not right in every situation.  This article by Catherine Seda gives some good parameters for deciding if "Pay-for-Performance online marketing is right for your business".

SEO "Performance-Based Pricing" = "Pay For Performance" (Part II)

The image of the "Devil" beckons (click on image to see) when integrity is compromised.  "Pay For Some Kind of Performance" SEO compensation is NOT going to work long term, if the "Devil" in the buyer or the seller gets his way.

Recently, Merriam-Webster Dictionary released its 2005 "Words Of The Year" with the number 1 searched word being "Integrity".  About 200,000 people went online to find this meaning: "firm adherence to a code of especially moral or artistic values."  I bring this point up now because of Danny Sullivan's recent reference to the state of the Search Marketing Community's reputation: "Despite gains, many will still see us as the used car salespeople of the Web."  My 12/11/05 post explains better Danny's continuous caring position on how some ("many") people question the integrity of the Search Marketing Industry as a whole.  This only reinforces the ancient axiom of "CAVEAT EMPTOR" ("...the buyer alone is responsible for assessing the quality of a purchase before buying.")

Before I examine Benson Shapiro's "Is Performance-Based Pricing the Right Price for You?", I want to mention Shona Seifert's "Code of Ethics" for the Advertising Industry given at a judge's request.  Traditional Advertising Agencies have been around a lot longer than 10 years, and have much more complicated and less easily accountable media than just the Internet to deal with.  But, my post on "Overstating Agency Fees = Lessons Learned" brings out the need for Personal Integrity no matter what is currently "acceptable" within any industry.  Also, SEO buyers have just as much responsibility for Personal Integrity as SEO sellers do, in my opinion.  "Performance-Based Pricing" will not be "the right price" unless both parties to the contract are "Living the ethics" as Shona says on page 12 of that pdf document submitted to the court on 8/3/05. 

SEO "Performance-Based Pricing" = "Pay For Performance" (Part I)

If a used car salesman tells you that the "older model", as depicted in this animated image (click on "the empty white space" below to see it), gives you more "BANG" for your buck, ask him if that means "suspicious noises" like "grinding" and "clunking".

Danny Sullivan ("Search Engine Guru") recently said (according to "RustyBrick" of Search Engine Roundtable) in his "KEYNOTE: The Search Marketing Community" at the 2005 Search Engine Strategies Conference in Chicago about the current reputation of the Search Marketing Industry (as a generalization): "Despite gains, many will still see us as the used car salespeople of the Web." 

How sad that fact is after 10 years of the emerging growth phase of this relatively new industry.  My opinion is that there is enough blame to go around for both some buyers and some sellers of Search Marketing.  It's not just some greedy sellers, it's also overly competitive (the end justifies the means) buyers who want their Search Marketing vendors to do whatever it takes for them to beat their competition.

I believe Danny Sullivan wants the entire industry to "do the right thing" to promote faster growth of the Search Marketing Industry, but he doesn't control the search engines, the search marketing sellers, or the search marketing buyers.  He also knows the challenges (as seen in Danny's Post on "Improving the Reputation of The SEM Industry") in doing any kind of "standards" or "certification".  He is also wise enough to not want (what may happen eventually) any kind of governmental "Used Car Lemon Law" legal regulations, in my opinion.  So what is a prospective buyer of Search Marketing (SEO-SEM) to do besides educate himself (as much as time allows), and research (as much as realistically possible) the many SEO's and SEM's, and eventually gives a "Requests For Proposal" to possibly only three. 

So, here is the first post on my "one suggestion" to help the Search Marketing Industry grow.  It involves a form of "Performance-Based Pricing" or "Pay For Performance" that I promised I'd come back to in "SEO Consultant Compensation Based on "Knowledge".

Organic SEO vs. Internet Search Paid Placement

My last post focused on "Paid Placement" as defined on page 4 of "The State of Search Engine Marketing 2004".  This post will try to better define why "Organic SEO" should be any online marketer's priority for a long term strategy.  There are many writings on this topic, and I have picked some of my personal favorites to make that very point.

An SEO-SEM firm called OneUpWeb did a study that substantiates the SEO industry's claims that first page listings in natural search results increase both traffic and sales.  So conversion rates of these natural, organic listings tend to convert to sales better than paid listings do, in my opinion, because more internet search users prefer the organic listings.  To back that up, another SEO-SEM firm did a study called "iProspect Outsourced SEO Metrics & ROI Study" that is quoted in this 9/15/05 iProspect press release which says: "42% of search marketers who outsource BOTH the management of their SEO and the PPC campaigns, find that search engine optimization produces a higher ROI."  So, now let's hear from an individual marketer (a prospective Organic SEO client) who is currently using only "Paid Placement".

Internet Search Paid Placement vs. Organic SEO

If you click on the image of "wallets", you will see a lot of money coming out. This is what is happening in the world of Search Marketing with "Paid Placement" ( PPC Advertising which is related to CPC ). SEMPO did a report on "The State Of Search Marketing 2004" in December of last year. It showed on page 6 that "paid placement" received 81.8% & "Organic SEO" got only 12.0% of the approximate 4 Billion spent on the "2004 U.S. & Canadian Industry Size Estimate by Tactic". The total number will be a lot bigger for 2005!

Yet, in my post on "SEO Buyer Marketing Accountability" there is a quote from the SEM company, iCrossing who was one of 31 leading industry experts interviewed for that report: "Natural results attract the majority of internet search click-throughs - up to 80%, depending on the vertical and type of search." So, why is it that so many people take so much more money "out of their wallets" for "Paid Placement" vs. Natural "Organic SEO"?  There are many reasons, but I believe the main ones are: 1. People who do marketing don't have to spend as much time educating themselves and making changes to their web site as they do with organic SEO (or, so they think), and 2. "Paid Placement" is a "quick fix" as results are instantaneous vs. over time. Maybe they even feel that "Paid Placement" is more "Pay For Some Kind Of Performance" vs. "Pay For 'Best Efforts' with No Guarantees"?

Mass Mktg. Is Out; Accountable Internet Search Mktg. Is In!

The "UPC Code" (click on image) is a tremendous "accountability tool" that helps retailers and consumers.  On 8/29/05 the ANA (Association of National Advertisers), and the AAAA (American Association of Advertising Agencies) announced "that Ad-ID, a universal ad coding standard, has been adopted by more than 300 of the nation's top marketers."  This latest system generated ID tracking code can be used in all forms of advertising, including online.  I feel it is only one of many definite signs of the increased emphasis on tracking, measurement, and overall "accountability" of all kinds in many different forms of marketing.

My last post talked about the accountability of tracking online leads to offline sales for Search Marketing buyers.  In the 10/8/05 release of the "ANA Marketing Accountability Task Force Findings" on page 4, it says: "Relatively precise results from new marketing alternatives such as the Internet have fed management's desires to understand the relative efficiency of all marketing expenditures.  Ignorance of the law of ROI is no longer an effective defense."  Further on, on page 4, it says: "The focus on accountability has an ETHICAL aspect.  Many marketers understand that marketing funds aren't 'theirs'."  So, maybe now, the old "Spend it all, or you may not get as big a marketing budget next year." attitude will be less prevalent.  Wait, there's more.

SEO Buyer Marketing Accountability

In my post on "SEO Consultant Compensation Based On 'Knowledge'", I said that "I believe that the SEO seller should not be held accountable for what does or doesn't happen offline, but the SEO buyer should be!"  The reason for this is, basically, ONLY the SEO buyer has control over what happens offline, after the initial "actionable" contact is made by an online prospect.  This is why I'm against the concept behind the traditional definition of "Pay For Performance".

The SEO buyer is a marketer of products or services like the 370 Members of the "Association of National Advertisers".  They recently focused on a "2005 Marketing Accountability Forum" (7th link down on the left).  I did not attend, but I know they discussed their own responsibilities in tracking all leads from all kinds of sources including those enabled by outside vendors.  The President of the ANA did this blog post on 8/25/04, and Kate Maddox of B2B Online Magazine recently did these two articles: "ANA Explores Marketing Accountability", and "ANA Releases Marketing Accountability Study".  The 10/3/05 article said: "The task force also found that the most successful companies have strong end-to-end marketing processes that complement their focus on metrics."