SEO Revenue Models for Agencies

In a nutshell this post will discuss alternative revenue models for SEO services. Many clients and SEO agencies have vastly different expectations of any specific revenue model. They also have their own ideas as to which revenue model is most suitable.

From an agency perspective, there are a number of options that can be offered to clients:

• Pay Per Hour
• Pay Per Page (full page by page SEO)
• Pay Per Phase (e.g. keyword research, html element composition, copywriting, link campaign etc)
• Pay Per Revenue
• Pay Per Performance

Pay Per Hour (PPH)

This is pretty much exactly what it says. The agency applies a standard charge per hour regardless of what actual SEO work is being managed whether it is a site audit, keyword research, implementation, copywriting, link building, analytics etc.

PPH usually works very well for very both very large and very small budgets:

• Many large budgets (usually large companies) tend to prefer to pay hourly rates as it makes it easier for them to compare service offerings and to calculate ROI. It also makes it easier for them to compile comparable cost data on a month by month and project by project basis.
• Many small budgets may be very small scale projects that require quick turn around. The per hour rate provides the client with a clear, cost backed time frame from the SOW (statement of work) phase. Alternatively, a small budgets may simply mean a start up company which really needs to manage the project on a cost per hour basis due to severe budget constraints.

Pay Per Page (PPPg)

This also is pretty much what it implies, but agencies need to be careful to specify exactly what is included in a PPPg model, and what is not. For example:

• SEO audit
• Keyword Research
• Composition of html elements based on keyword research
• Copy writing
• Link Building
• Analytics
• New page creation (e.g. custom 404)
• etc

Some clients simply wish to have their home page and a few key pages audited. If this is the case, it is necessary to explain the concept of page rank bleed to non-optimized pages along with options including robots.txt and nofollow (for example). This is especially pertinent to larger sites with numerous pages which employ a CMS on the product area that they do not want optimized for cost or other reasons.

Apart from clarifying which SEO elements will be applied on a page by page basis, it is also very important to ensure that the agency provide accurate page number data in their proposal. Actually listing the pages by URL in the proposal and subsequent SOW is prudent.

PPPg requires significant initial cost workings on behalf of the agency to ensure that all resources required are included in the costing. For example:

• Insight and Planning (SEO keyword research)
• SEO Information Architecture
• Web design
• SEO Web dev
• SEO Copy writing
• Analytics
• Project managers (PM)
• Quality assurance (QA)
• etc

Pay Per Phase (PPF)

Intuitively this option is not obvious to many clients. However, when it is explained it is often the preferred option as it allows the client to pull out upon completion of any specific contracted phase. For this reason it is important that all fixed costs attributable to each project phase be applied on a phase by phase basis.

PPF basically allows the client to choose from one or all of the following core SEO project deliverables:

• Keyword research
• Implementation of keyword research (including associated design time, dev time, PM time, QA time, etc)
• Copywriting (this is often requested as a separate phase)
• Analytics
• Link campaigning

Agencies often balk at providing any PPF option if they do not start with the keyword research phase as they cannot guarantee results. If a client is determined to utilize their own research, and if an agency shows due diligence by explaining that this may not be optimal, there is no reason for the agency not to embark on a different phase. They are being paid for the phase they deliver regardless of performance. While I would not recommend doing this, it is true that some clients can be both difficult and obstinate. It is therefore often necessary to simply do what is requested to keep them on your books. If this is the case, then objections must be clearly communicated and referred to if (or when) the client starts to complain about a lack of results.

Pay Per Revenue (PPR)

PPR models start to get a little tricky. They should only be offered if the client gives the agency full control of the website from an SEO perspective and contracts to the fact that all recommendations will be implemented. For example, the agency must be allowed to:

• Conduct an SEO site audit and gap analysis
• Conduct full keyword and competitive research
• Implement all recommendations
• Manage the backlink campaign
• Have full access to analytics data
• etc

If the client has their own in house dev team, then it must be clearly stipulated in the contractual agreement between the agency and the client that the in house team implement all changes exactly as provided, and to proposed time scale.

A sticky point is that all clients have the right to review all recommendations for their web site prior to implementation. The initial proposal needs to ensure that there is a per hour charge, or a scalable oversight fee which applies to any time spent on client review of recommendations, client disputes, client nay-says, and simple client tardiness in sign-off.

PPR models usually allow for a percentage fee of every sale made in excess of a per month benchmark sales volume (taken prior to optimization as an average of the previous twelve month period). PPR model providers also need to be careful to consider the state of the economy as well as the client’s market and industry before committing themselves. For example; if an online mortgage company requires a PPR model (based on amount borrowed) for full SEO services and a recession is looming, it may not be financially feasible for an agency to embark on an SEO project for which the model is PPR.

Pay Per Performance (PPP)

This model is possibly the most convoluted, but also the most realistic option for many clients.

The easier types of PPP that an agency might offer include a fee per:

• Email sign-up
• Pay per view access document (e.g. a single research doc)
• Pay for subscription access to content (e.g.an annual membership to all pay-for research, tools, database information etc)
• Pay per conversion rate (some companies have difficulty assigning a specific value to a sale; e.g. a marketing VP who works for a hospital and has been tasked with increasing new patient visits to the in-hospital optometric specialists. Gaining an average cost per client over a 12 month period is usually the best option as it changes this model into a more intuitive PPR model, but it is not always possible. These models need to have revenue applied on an incremental percentage conversion rate point, which further complicates matters.)
• Pay per click-through-rate (this is usually not optimal for any online business apart from one simply attempting to increase brand or product awareness in a highly competitive or niche field. It should be complemented by some kind of sign-up or specific trackable page interaction.)

More ‘convoluted’ PPP options include applying specific scalable charges to:

• New exposure (new rankings) in the top 10 listings for:
  • Specific keywords
  • Pages
  • Microsites
• Increased exposure (improved rankings) in the top 10 listings for:
  • Specific keywords
  • Pages
  • Microsites
• Maintenance of top 10 listings for:
  • Specific keywords
  • Pages
  • Microsites

These options require at the very least:

• Very carefully worded proposals
• High (scalable) per ranking charges to include every facet of the SEO work that goes into the project
• Full agency access to the entire site
• Full agency SEO recommendation implementation (owner-management of in-house client team if necessary)
• Full disclosure to the agency by the client of any changes made to the site that were not agency initiated or recommended
• etc [yes, there is more (scary, no? :)) – but it depends on project and client relationship]

While engines crawl, index and rank pages, the home page authority plays a very big role, as does the fact that engines can ban or penalize sites and not pages if they identify manipulative abuse.

These last PPP options can, by definition, be a very risky option for an agency, and prove a great option for clients. But as we all know high risk often leads to high return, so it depends on the agency. If an agency should choose to consider this PPP model it is imperative that they have full understanding of the internet market place, competition, and the respective apparent algorithm’s perception of the site as an authority in it’s topical area. It is also vital that the agency be fully aware of algorithmic changes, economic variables that might affect the target market and the industry, and consumer awareness of (and interest in) both the generic market and specific product or service online offering.

Conclusion

Providing a range of revenue models for clients can increase business in the form of interest and project initiation. Some models may be best left untouched for some agencies.

Determining the advantages, disadvantages, risks and opportunities of each revenue model needs to be done at an agency level. It should also be based at the very least on knowledge of each respective client’s online industry competitiveness, market penetration, target market awareness and the financial capability of the agency to carry costs if the PPP model does not return the anticipated results.

Laura can be reached at: laura at semcanada dot org

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