It is every customer’s desire that he/she achieve tangible results for every marketing dollar spent – results that can justify marketing budget allocation and expenditure. Having paid dearly for a search engine marketing campaign, the client will be just in expecting quantifiable results in the form of qualified visitors, sales, conversion ratio, etc. However, many a time there are situations wherein online agencies have failed to deliver the expected results. Clients faced with such precarious situations ‘cry foul’, when at times the reason may be actually beyond the control of the agency.

It has been empirically established that online marketing agencies usually cite external factors as the cause for under achievement or non performance of the campaign. More often than not, they try to shift the onus on external factors such as change in search engine algorithms and PR update to hide their incompetencies (with due regards to agencies who put in a lot of hard work and are genuinely affected by it). In addition to this, online competition is getting tougher by the day as search engines gradually switch from keyword density and link based algorithms to ranking sites by overall contextual relevance. Online marketers (including me) are finding it increasingly difficult to meet clients’ expectations; expectations that hovers around return-on-investment. The intricacies of search engine marketing, which encompasses your website, the nature of your business and competition for targeted keywords/key phrases, doesn’t make things any easier for us. However, no matter what the justification (true or false), the clients stand to lose money and revenue generated from their websites. To minimize such occurrences, the agencies should be held accountable for most of such unforeseen eventualities.

Pricing models based on performance aka pay-for-performance seems to be the panacea, we all have been desperately looking for. Performance based search engine marketing is centered around a simple principle, you pay for results. The value proposition of ‘no result = no cost’ is sure to catch the attention of prospective clients. For clients, this would translates into minimal marketing expenditure and maximum revenue coupled with insignificant risks. The performance criteria can be benchmarked against metrics such qualified traffic, conversion ratio/sales, downloads, opt-ins, double opt-ins, registrations, and list goes on.

The choice of key performance indicators (KPIs) varies from one agency to other; in some cases, the clients have the freedom to choose the performance criteria. Linking remuneration to performance ensures maximum bang for each marketing dollar spent. The agencies get paid for doing their jobs and the clients get what they always wanted – quantifiable results. Irrespective of the KPIs used, performance based solutions are tauted to be better than guaranteed services.

Time and again, performance based search engine marketing has delivered far better results than traditional search engine marketing approaches. There is however a question that keeps nagging me; is pay-for-performance a risk free proposition, both for clients and agencies? Sounds too good to be true!

We would encourage you to get in touch with us on your experiences with pay for performance models and which model worked best for you.