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SEARCH NEWS: Google scraps 'lazy' reseller model

Google's decision to scrap its best practice funding (BPF) model next year is good news for advertisers and agencies, say search marketing experts.

Agencies are welcoming the move, despite it meaning the end of financial subsidies from the search giant because they say it will create a more level playing field and stop the biggest media houses from winning “lazy” client business on the back of big discounts.

The model, which Google recently announced it would remove at the end of next year, sees agencies getting between three and eight per cent of their ad spend returned each quarter depending on how much they place with the search engine. Its aim was to drive search advertising and allow investment in technology, training and research. But many believe it is being abused by media buying groups and that it is unfair on clients who carry out their search marketing in-house and can't benefit from subsidies.

“Some of the major media buying groups have been doing lazy campaigning,” says Paul Doleman, CTO and head of paid search at Spannerworks. “They use the BPF model as a loss-leader so they can run campaigns on the rebate they get without looking at best quality results. And if you're a big business, or a small player – both of which do a lot of brand building in-house – you can't benefit at all.”

Search marketing agencies predict a client shake-up in coming months, as those that worked with agencies offering the biggest discounts seek to move. Some clients are also expected to shun agencies and run campaigns in-house now they will no longer have financial incentives for placing business with them.

Andrew Girdwood, head of search at Big Mouth Media warns that agencies who until now have operated to share the BPF money with clients, as opposed to investing it, need to “change or die”. He adds, “There are agencies who will not share which keywords are being bought on which search engines and for how much. They will struggle to justify the true cost of each click and will have to change.”

Google acknowledges that agencies and clients have abused the terms of BPF and as a result is pulling the plug on the growth kicker element of the model in January.

The 'kicker' rewards agencies for significantly increasing spend with Google and some advertisers have taken advantage of this by switching agency every quarter to trigger the kicker and split profits. “There is evidence to suggest that some advertisers were moving agencies to help that agency trigger its growth kicker,” admits a Google spokesman. He adds that BPF was always intended to be a “short term” measure to be reviewed annually.


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