Money for what? Search marketing payment models
Amplify Interactive’s notes from SMX Advanced Seattle 2008
Session 1: Money for What? Search Marketing Payment Models
This session covered basic pricing models, pros-cons, etc. The session mostly served as an affirmation that our pricing model is the right fit for us, but as I’m always reminded of at these things – we aren’t charging enough.
Below are my notes from the session, with a few personal thoughts thrown in.
Ken Jurina – Epiar
“SEM pricing models”
First discussion to have with any client regarding SEM: “Analytics is the key to proving what you do and what your value is, and needs to be addressed up front”
Typical SEM pricing models:
- Retainer-based: monthly fees, 6-18 month contract & search & pack
- Pay for performance: %change in sales, leads & traffic with skin in the game commission structure
- Fee for service: project based with finite scope
- Hourly consultation: often a quick-fix approach, but fees are typically way too low considering the long-term impact
Ideas for foot in the door services & getting started
- Web site audits: (Epiar charges at both $5500 & $9500 pricing levels for very custom audits)
- Negative keyword reports
- Web analytics
- Hourly and/or 3rd party consultation (copywriters, agencies, web dev companies) *problem is that fees are probably too low for the value you’re providing
Proposals & Contracts
- Shows seriousness & professionalism
- Get to the point – ie 5-7 pages
- Proposal, presentation & invoicing should all be consistent
- Show transparency in services
- Ensure the logic is evident; clients buy in & refer business when they understand deliverables
Promoting yourself, especially when SERP competition is crazy
- Build a strong home base with a local presence
- Finding it tough to rank in serps?
- Promote brand & self
- Be active: blog, seminars, sempo, sempdx, etc
- Become a recognized expert, not so obvious tradeshows
George Michie, Rimm-Kaufman Group (paid search only)
Rev-share disadvantages
- Too much easy money on brand, with a disincentive to dig deeper
- Marketers didn’t invent christmas, doesn’t take more work / hours when clients make more $
- Didn’t want to bicker with clients over credit allocation
Cost markup disadvantages
- Can’t make $ on the low-end
- Paid for wasteful spending
- We still didn’t create Christmas
- For large budgets, fees become divorced from the cost of providing the service – a$150K / mo for a $1 mil / month spend, that’s a really tough cost to justify
The blended model:
- % of ad spend (RKG charges 12.5%): gives incentive to grow non-branded search, brand advertising has it’s place, no questions about allocation
- With a minimum monthly fee (RKG charges $3k minimum): ensures profitability with small clients
- Maximum monthly fee (RKG caps charges @ $12.5K month): protects clients, keeps fees in line with cost of providing service (never considered this, but haven’t run into this problem yet…)
- For these fees, RKG’s gives everyone a full service including: keyword construction, ad copy, landing page testing (they don’t do the design – someone else does, this is just to run the tests), bid management & standard ppc analyst coverage using proprietary tools
Paul Wilson – iProspect
“Performance based pricing models”
It may work ok for bigger guys, but I won’t even consider this model – so I’m not really going to spend a lot of time on notes for this. It’s obvious that it helps to align goals, but I feel there are too many variables that are out of our control in this model: faulty tracking / analytics, design & usability issues, too many cycles tracking & reporting, some clients aren’t disciplined enough & the target moves, etc.
Q&A
business & account structure: some look at revenue per
iprospect: search marketing specialist (day-to-day contact), search marketing analyst (more of the technical type who writes recommendations etc), overseen by a client services type
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