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Google will make some important changes to their legal terms and agreements with agencies next year. It will force extra transparency and it is a good thing.

Let's speculate who they're going after...

I can get awfully worked up about digital marketing. Yeah. I know. Geeky. One type of villain that I particularly get angry at are the performance agency scammers.

You know the drill; they could call it a black box approach or might simply hide behind IP claims but there are agencies who'll take your paid search cash, "spend" it for you and deliver on something like a CPA target.

The scam? Some of these agencies might not be spending all of the money on search. Some of these leads might be acquired elsewhere. A common trick is not to reveal how much certain keywords actually cost in the auction. Some performance scams even put a technology layer on top, letting the “client” see some cost data but that doesn't actually match what's in the raw AdWords account.

Google is taking steps to force partners (aka agencies) to reveal some core attributes of a campaign. Come February 2011, Google will amend their legal terms and conditions so that partners must;

  1. Show how much advertising budget (cost) was actually spend on AdWords campaigns.
  2. How many times ads appeared (impressions).
  3. How many time users clicked on your ads (clicks).

Google plans to get that rolled into its paperwork for February 2011.

There are still more details to come. We don't yet know whether this data applies on a macro level only or whether more details will be required. From my point of view, the more detail agencies must show the better.

Google's current third-party reporting requirements are in their large accounts & agencies help section.

Let's just pause on the “large accounts & agencies” phrase for a minute. It's certainly true that some performance deals, especially in travel and finance, are large.

The pub chat I sometimes pick up is that some traditional media buying agencies might tell their clients that a percentage of the media spend has gone on search. Sometimes they promise that an actual X million dollars will go on search. Sometimes that doesn't really happen.

In fact, it is fairly common for some traditional media buyers to struggle to scale up search spend. That's why some of the bid management systems have automatic keyword building functionality built in.

That's also why one of the first things an agency with a strong search team will do when picking a search account off one of the old school boys is sort out the likely keyword mess created by the previous agency's desperate attempt to spend budget.

I'm not honestly sure how often this “sometimes” situation occurs. Google suggests that only a third of agencies that it works with currently meet their proposed new transparency requirements. I find that number surprisingly and disappointingly low.

We may never know whether it was frustration with performance agency scams, traditional media agencies blundering around with search or some other reason was behind Google's new transparency initiative. I do know the new transparency rules will be a good thing.

(Flickr credit Jepoirrer)

Andrew Girdwood

Published 2 August, 2010 by Andrew Girdwood

Andrew Girdwood is Head of Media Technologies at Signal and a guest blogger for Econsultancy. He can be found on Twitter here.

41 more posts from this author

Comments (4)

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Rob Weatherhead

Personally I think this change is aimed at the lower end of the market, and those providers, or resellers, selling to SMEs.  Google did a similar thing with their Google Reseller terms and conditions in setting a minimum required % of budget to be spent on Google Adwords.  They brought it in after some resellers in the US where spending as low as 10c in every $1 on advertising. Obviously within the larger agency market they aren't offering any sort of Google status (or associated benefits) so cant hold agencies to such terms, this is the alternative.

The change is likely aimed at resellers in the SME market who, as you describe, gain clicks from numerous sources or offer a fixed amount of clicks for a given budget (often as low as 50% of what could actually be achieved). 

I dont see this necessarily hitting the media agencies are most are getting their act together now with regards search and few are still treating it as a "media buy" (maybe your experience is different?).  

I do see it being detrimental however to pure performance based deals.  Where a client agrees to pay a set fee for sales/leads etc on a scheme similar to an affiliate relationship.  Many of these relationships are brokered at the higher end of the market which are beneficial for the client as they get security of return and it keeps the agency on their toes.

I suppose the full extent to this will be revealed in the future but my feeling is it will hit the lower spending end of the market harder.

about 6 years ago

Rob Mclaughlin

Rob Mclaughlin, VP, Digital Analytics at Barclays

Bring on the transparency, it can only be healthy. Agencies that are likely to complain that this exposes their intellectual property should be a little more mature - you should always expose how you are achieving performance If fact, how do they successfully pitch their clients for extended or growing spends without explaining all the 'clever' things they are doing?

about 6 years ago

Dominic Geary

Dominic Geary, Managing Partner at Carat (Leeds)

Most agencies will welcome the move by Google, as the majority of agencies fully breakdown their charges. However, there will be a number which will find this level of transparency uncomfortable.

In our experience we’ve found it is the smaller digital agencies guilty of smoke and mirrors, which is obivously disappointing and damaging to the industry. In reality, it is likely that these practices are taking place in all agency types and sizes.

about 6 years ago

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Lead answer

I think that others are getting up , google doesn't smack but you know google is the google , noone can defeat it or overtake it.

He is the master key for the searching.

almost 6 years ago

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