The SEO industry has always used “dollars for hours” as currency quite like the traditional accounting and law firms around the globe. What would happen if the currency was to change to something that is more tied to the value being delivered?
Most SEO firms are restricted by their fixed rate contracts to go all out for their clients. There is generally a limit to the resources that they can apply to the campaign of any one client. The clients do not generally want to spend a lot of resources on SEO campaigns; the SEO budgets cannot be compared with the Adwords budget, in most instances. One cannot blame them as it is much harder to isolate the impact of previous SEO activities when compared to PPC. The business case for an upcoming SEO initiative is also quite hard to prove and in most instances, the SEO initiatives remain underfunded.
How does one go about changing the opinion of people who allocate money and hold the purse strings for the marketing initiatives being taken up? These people have to change their outlook from viewing SEO as an unpredictable strategy to one that is completely accountable. And the easiest way to change the established viewpoints related to SEO activities is to advocate a pay-for-performance pricing model quite like the ones used in paid search. This is possible when there is a objective tracking system in place to measure the SEO efforts and results. The SEO industry needs “search analytics,” as opposed to “web analytics” for it to achieve its maximum potential. Only when such a system is in place, the SEO industry would be able to capitalise on the immense value that it is creating for its clients.
Many smart players have already taken the first steps on the road to accountable marketing. Some have developed a scalable and automated solution and have started pricing it on a cost-per-click basis. Such a system comes with its advantages that cannot be ignored at any costs; when the pricing model is based on the value being delivered, the vendors have all the incentives to deliver. For the clients, there is a reduction of risks as they need to pay for the actual clicks only. However, even these smart thinkers have not been able to break free of the flat fee pricing completely, with such pricing being implemented for SEO audits.
This model comes with certain problems as well. An SEO firm might not be too happy with such a performance based arrangement. The proper implementation of the recommendations at the client’s end would have an impact on its revenue.
So, when would an SEO consultant go for a performance based pricing model ? It could bet on one when there is a predictive search analytics platform in place.
Such an application would help you decide on the viability of a given SEO campaign. You can estimate the number of potential referrals, the revenue impact of these referrals, the amount of work needed, and the ROI that can be obtained from the same. You could make this estimation for all the keywords in a particular campaign list. You can even use this application to find out keywords that are not there in the original list but which might be driving traffic to the sites. This can be done without having any data on conversion rate, bounce rate, time on site as well as pages being reviewed.
Some smart thinkers are using the keyword popularity data from Google and Yahoo and “click through rates” to arrive at the number of referrals. The “predictive search analytics” platform is facilitating the process for many of these firms and helping them to see the upside potential of existing keywords as opposed to the baseline traffic. Such a platform is helping firms to calculate the client revenue from new transactions; the value of non-monetary actions such as the download of a white paper can also be quantified using such a system.
As of now, implementing a pay-for-performance in a SEO campaign could be a bit tricky. When you are estimating ROI in a particular keyword, you need to have a fair idea on the cost of optimising the same in terms of man hours. This is difficult when you are not aware of the particular page to be optimised and the steps needed to optimise the same. As a vendor, you would need to be aware of the costs of acquiring the associated revenue. You could do so by estimating the “difficulty in optimisation” for each of keyword.
There is a correlation between the “difficulty in optimisation” and paid search competitiveness and so the paid search data points can be used to approximate the optimisation difficulty. The paid search data points could be anything from the number of search queries on Google and Yahoo to the number of bidders on paid search.
The SEO can nominate the budget in terms of the hours spent in the campaign; the new applications that are being developed by some leading firms can then be used to allocate the hours across the identified keywords. The ROI can be calculated for each keyword and the SEO firms can decide on the most appropriate performance based pricing models to pitch before clients. It could be anything from search referrals, sales, and actions to website referrals.
This knowledge can then help the SEO practitioners to create a case for performance based pricing. A performance based pitch could place a firm in an advantageous position viz a viz its competitors. Businesses wanting to establish themselves as true performers cannot afford to miss this window of opportunity.
