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Affiliates in line to take search marketing away from agencies

Platform: Internet | Author: Mark Kuhillow, MD, R.O.Eye | Source: NMA magazine | Published: 30.08.07

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The search industry is changing quickly, with developments from Google and almost daily mergers and acquisitions. But why the sudden spike of interest in search?

The recent release of Google's beta cost-per-action product signals its desire to deal directly with advertisers. Google is also expected to scrap its Best Practice Funding (BPF). Together, this means that pay-per-click commissions are in serious jeopardy. For search agencies, the end of PPC commissions is hugely important - these...

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... being how they're paid - and search marketers are already starting to feel the pinch in their fees.

However, all marketers need to consider the implications of these changes. If search agencies now get paid by Google to manage search for their clients, what'll happen when Google stops footing the bill? Someone else is going to have to pick it up, most likely the client.

There are three options marketers face after Google eliminates PPC commissions: search will need to be moved in-house, managed on a fee basis or outsourced to affiliates.

If Google withdraws BPF, search agencies will need to adapt their business models to create new remuneration structures, as they did when BPF was introduced. The elimination of commission will see further fees being incorporated into business models and the management of search being charged back to the client.

Moving search management in-house, while perhaps less expensive than the amount a search agency might decide to charge, could have a serious impact on a company's marketing efficiencies. Search is still a fairly young industry. There are only a handful of recruitment companies who focus on this area, so it's going to be tricky to find specialists. If search isn't done properly, a company's search acquisition costs could find themselves under threat. Is it really worth the risk?

Affiliates, however, are unaffected by the changes taking place. They are, and have been, managing search for clients alongside affiliate programmes for quite some time. They're also good at it. The best news for marketers is that, unlike search agencies, affiliates don't rely on Google commissions.

Affiliates, which last year generated £2bn in sales in the UK, are about to become the search agency's greatest threat. Marketers are now seeing the financial rewards a good affiliate programme can offer. The demand for services from search 'super-affiliates' - the 20% of sites that reportedly account for 80% of affiliate returns - is high.

Marketers want to get close to the big players in the affiliate space and soon they'll be able to. Super-affiliates are already taking steps to develop stronger client- facing structures.

If marketers opt for affiliates to take over their search marketing, they won't only be getting a consistent service that avoids the search remuneration shake-up that has hit the search market, they'll also be able to form closer relationships with the top affiliates.

While search agencies work to adapt their business models to cope with the changes ahead, affiliates are preparing to step in and offer risk-free search management alongside payment by results.

During this period, marketers need to keep their eyes open: watch the changes in the industry and see how these changes will impact their business. Once PPC commissions are eliminated, look out for who gets left with the bill.

Mark Kuhillow is MD of affiliate management agency R.O.Eye