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)