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Believe it or not, there once was a time when Google still had to convince large advertisers that online marketing (and more specifically search engine marketing) was a very cost-effective channel to acquire customers.
Initially Google provided discount to advertising agencies to encourage the adoption of its Adwords platform but in 2006, since this model wasn’t really fair towards other advertisers, Google replaced it with the Best Practice Funding (BPF) Programme.
This programme was still aimed at companies and/or individuals who manage Adwords on behalf of other advertisers but it introduced some changes and conditions.
Firstly, the discounts were replaced by a tiered rebate system, which encouraged qualified participants to increase their spending on Google Adwords. Secondly, the programme was only applicable to advertisers who targeted EMEA (Europe, Middle East and Africa) countries.
That made sense for Google because the adoption of SEM in the US was already in an advanced stage. Lastly, Google tied qualification for the programme to a set of preconditions that were aimed at ensuring that the people using Adwords on behalf of clients were competent and able to produce results.
By creating the programme, Google effectively created a competent and incentivized sales force that would take its advertising platform into new markets. And it is indicative of Adwords’ success that after only two years Google announced that 2008 would be the final year of the BPF programme.
In that short period of time SEM has proved its worth to even the most sceptical advertiser. It even seems that Google is able to withstand the economic gloom that is currently gripping the world: its latest revenue figures were up despite the fact that the number of searches didn’t increase in that same quarter.
In times of economic downturn, advertisers still seem to turn to SEM as a marketing channel - possibly because of the ability to measure performance "absolutely".
The end of the program could also be driven by a slowing growth in Google’s revenue. Since Adwords is now the undisputed leader of SEM platforms it is time to reap its network benefits. Cutting the programme will not deter people from using Adwords, but it will add a significant amount to Google’s bottom line.
Perhaps Google will introduce smaller, more targeted programmes in the future if or when it tries to gain a foothold in new markets.
China for example is a potentially massive market in which Google, like so many other Western companies, is struggling to gain ground. So it wouldn’t be surprising to see a new incentive programme specifically targeted at Asian countries.
Ivan Izikowitz is the Managing Director of Clicks2Customers UK Limited .