It seems that change is in the air for advertises and search marketing agencies. From January 2009 Goggles European third part program commonly know as Best Practice Funding (BPF) will come to an end.
Best Practice funding was launched by 2005 which according to Google was to drive agency and industry performance, with the payment designed to be reinvested in agency research and development. Interesting enough Goggles market share in 2008 is over 90% while almost a 27% jump from 3 years ago. During the 3 years of BPF, Google has forked out up to £50 million a year as kickback to agencies who earn anything from 3%-8% of their ad spend returned each quarter depending on how much money they place with Google and other qualifying factors. Hence its not surprising that Google has decided to phase out their BPF (Mission accomplished) while Microsoft and Yahoo struggling to protect their small market share continuing continue to offer discounts in addition to offering other initiatives like cash back schemes.
On the agencies part the Google kick back was often passed on to advertisers with the objective of increasing the minimum spend threshold with Google and retaining bigger accounts. Depending on the kick back agencies created a many different fees structures to pass on the benefit to the advertisers in the form of free tracking technology, lower management fees or increased spends.
The withdrawal of BFP is great news for the search marketing in UK as agencies both big and small will be able to compete at a level playing field and winning business more on account of their competence rather than just muscle power provided by Google.
Author: Anant Swarup
Date: 22nd September 2008