Managing Director at Shine Marketing
26 August 2008 13:28pm
I doubt this would work either.
If the client is getting a return based on a fee structure, why would they want to change after 3 months to one that will cost it more as the agency improves its performance?
Likewise if the first 3 months prove that the site doesn't convert and has no demand, why would the agency accept a lower fee for the same workload?
There are plenty of agencies that will work on a performance basis. Just have a look in Google for agencies and add words like 'performance' 'CPA' and so on.
However they will pick clients who they have some expectation of a return from, who can provide reliable tracking of results, who are willing to make changes on their side on landing pages, copy and design, and where there is enough demand for the product/service to make the high initial setup effort worthwhile.
If your site soesn't fit these criteria you will struggle to find anyone interested in working with you on that basis.
Account Manager at British Airways Holidays
26 August 2008 15:54pm
Changing the deal after 3 months will only cost the client more if the agency improves performance. An improved performance from the agency means improved sales and conversions for the client. Why shouldn't the client pay more as performance improves? It's a win win situation really.
If the site doesn't perform/convert well in the first 3 months then of course the agency is not going to accept lower fees – why should they if it is no fault of there own. This brings me back to my original point. Without knowing exactly how the site converts this may explain why few agencies are willing to agree to a commission based deal. The 3 month period is an evaluation period for both parties.
If the client is confident in their sites ability to convert and agency is confident in the client’s site and their own ability to deliver quality traffic then both parties should be happy with a performance type deal.
Don’t forget that there is also pros to a client being on a % of ad spend deal e.g. if the client invests heavily in usability and improves conversion. PPC conversions will increase through no improved performance of the agency. If the agency is on a commission deal then they would be rewarded for this despite doing nothing to achieve it.
Head of E-Commerce at BEN SHERMAN GROUP LTD
26 August 2008 16:00pm
That's a great point DesG!
Director at Angel Internet Ltd
27 August 2008 20:01pm
Periscopix charge a set monthly fee, not a percentage.
* * * Web Retailer - UK eCommerce Software Directory * * *
MD at White Hat Media
29 August 2008 14:37pm
Interestingly we used to charge via the percentage model but it didn't work well. This was highlighted when we reduced a client's spend by two thirds and increased his web sales by a multiple of four, but earning us a third of what we were earning from the campaign :)
We'd be happy to talk to you about a flat fee and/or a perfomance based campaign.
Director at Tickbox Digital
12 September 2008 14:18pm
An interesting post. It's not uncommon for agencies to adopt this pricing model (charging a percentage of ad spend) as their management fee, however it can lend itself to abuse. Some agencies will ensure all ad budget is spent in order to hit revenue targets - even if this means missing campaign targets for the client.
There are a number of different pricing models in the mix. As already stated, a percentage of ad spend is one option.
Another option is a CPA model, whereby agencies earn a fixed fee per conversion. (This method is less common and can be complicated - most agencies will need to be sure a return can be made and as such negotiations for a CPA model can be fruitless.)
A third option and probably the most common is a fixed-monthly retainer, typically over a 12-month period (although some agencies are more flexible than others). An agency will analyse the campaign to identify a realistic management strategy in which they will assign 'x' amount of days per month for campaign optimisation and reporting. Again, depending on the size of the campaign and frequency of optimisation prices will vary.
At Tickbox Digital we charge a fixed <a href="http://www.tickboxdigital.com">PPC management</a> fee per month, which is reviewed bi-annually. With most clients the intensity of management is typically greater during the first 6-12 months, after which costs can be reduced inline with campaign performance.
I hope this helps somewhat in your decision moving forward.
Freelance at Emarketing Manager
17 October 2008 23:50pm
Once companies that have a great formula - they have a great landing page, they've done a/b/c/ testing, their checkout is a dream - well, why are they still penny pinching.
I quite often have to laugh once the greatest PPC campaign - and probably you've had it already - it's already gone and you're still trying to milk the messenger when the font he's trying to water his mouth with is dry, then his sandles are broken.
Bottom line, some PPC agencies are bad. Other's are damn good and charge a flat fee. Most PPC campaigns are rubbish as the purchasing flow is just rubbish! If you're looking to save money, make sure the rest of it is safely tied up!
CEO and Executive Chairman at PAY ON RESULTS SEO, PPC & CRO from Strategy Internet Marketing
14 February 2012 22:14pm
We have been operating PAY ON RESULTS PPC for a while now, and our clients love it, as our fees are tied to our clients' ROI not on the amount spent.
See more at www.strategyinternetmarketing.co.uk
Technical Project Manager (MBA, MBCS, CITP, CEng) at Naxtech.com
20 February 2012 10:26am
You could also try http://www.naxtech.com/services-online-marketing-performance-results-only-seo.html
Founder CEO at GTM360 Marketing Solutions
26 October 2012 20:02pm
We work on the basis of a small fixed monthly fee and cost per action or percentage of revenues.
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