Why % of marketing spend just doesn’t work for Search

As you may know, the most common fee structures for digital marketing management include paying a retainer or a percentage of a brands’ marketing spend to the agency in fee. The first method makes total sense; the agency charges an agreed amount which can provide the resources required to provide the agreed service. The second, however? Not so much.

With a channel such as TV or press, an increased budget often means additional spots or insertions, and therefore quite rightly requires more resource as the activity is taking place on a larger scale than originally planned.

Search differs in that often, the same campaigns will be active for years and years. Until a new campaign needs to be created (a product launch, a promotion), your main keywords should already exist within the account so campaigns do not require ongoing ‘creation’ or ‘building’; once created, a campaign (if properly run) should be subject to tweaks depending on the performance. Generally, these tweaks start as larger sweeping changes (E.g. removing search partners, adding negative keywords) and become more granular as time goes on, as continued efforts are made to achieve peak efficiency.

As you might imagine, these endless tweaks and granular pokes and prods do take some time, hence many businesses employing agencies to take the weight. Having said that though, unless there is a significant change to the objective, strategy, or product/service, an increase in Search budget doesn’t intrinsically increase the resource required to manage the activity. This is especially true with regards to automated optimisations, big strategies etc; by automating at scale, only a very significant shift in activity could declare the management approach outdated.

The truth is that Search agencies assume that a high-budget client will be more demanding, require more implementational resource, and entail more pressure and late nights than a thriftier client. But as they say, ‘to assume makes an ‘ass’ of ‘u’ and ‘me’.

Some of the higher maintenance businesses I’ve worked with had a £10 a day search budget; £10 a day to a smaller business means the same as £10,000 to a larger business relatively speaking. What takes the time is the increased strategy and the increased number of conversations to unearth splurge-worthy opportunities; thankfully time is something that can be rather reliably measured.

Agencies need to stop punishing clients for investing in digital. If a business ups their marketing budget by £100k and is then giving a percentage of this over to the agency, there’s even more pressure on that remaining £90k or so to provide ROI (not even accounting for the impact of diminishing returns). If a business is in the fortunate position to have the means to increase their digital investment, then they should be able to do this without being fiscally punished.

We want our clients’ businesses to grow; our Search fees won’t change until your resourcing requirements change.

By Niki Grant, Director of Search