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Old 06-09-2004   #1
Gibran11
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Smile Overture and/or Espotting Discount

Hi Everyone

I think this is such a great forum!

I have a question for you...

I work as a PPC manager for a big company online and they want me to ask Espotting and Overture if there is any way we can get a discount or some sort of commission from them, as we are such big customers.

You think this is possible? Are you aware of any other cases? Who would I have to ask in order to get the discount or commission?

Thanks!
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Old 06-09-2004   #2
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I think there is something by the name of overture ambassador program but am not sure how it works.
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Old 06-09-2004   #3
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Im not sure whether individual companies are supported or not, though I do know that both Espotting, Overture and indeed Google offer discounts to Search Engine Marketing agencies. This is obviously because SEM's will bring them enough business and spend lots of money with them. The common top line criteria to qualify for these discounts (for SEM's) is a minimum monthly spend.

You should certainly ask, although you may not get the same level of discount as an SEM would, Im sure that all 3 companies would be more than happy to offer you various levels of service according to what product you take with them. Some of these 'packages' can be of value whereby most of the work is done for you, for example, keyword suggestion, creation of listings and auto bid management, which saves alot of time and therefore money.

As they say, it doesnt hurt to ask.
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Old 06-10-2004   #4
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Gibran,

between 5 > 15% is possible based on how much you/your clients spend collectively.

more than the discount, it gives you direct access to problem solvers aswell.

good luck

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Old 06-10-2004   #5
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Hey Shak--

I had a reader ask me about this today, having heard the continuing rumors that Google might offer discounts to big agencies. I'd heard that from a few other sources to, so sounds like you're confirming it.

He also check with a contact at Overture -- Overture's response was, "there's no discounting on the P4P side." But sounds like your saying, this indeed might be the case.
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Old 06-10-2004   #6
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Hope I dont get my ass whipped here ...

In the UK, It's common knowledge that REPUTABLE and recognised Ad agencies get anything between 5 > 15% discount based on client Ad spend (Overture, Espotting and Google), as long as it is over a certain monthly spend.

Not sure about the USA.

I know however that Google is very strict about who they will allow into such a programme, and its not just open to any old SEO or SEM.

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Old 06-11-2004   #7
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I'm not entirely sure, but I have a feeling Australian ad agencies are offered a small discount by Google Australia and Overture Australia. Member here Chris_D might be able to clarify
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Old 06-11-2004   #8
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Hi All,

Its actually a broken business model, the way both Google and Overture have implemented it in Australia.

In my experience, it is totally inconsistent in its application. If you are an 'old school' agency - under the 'old' model of Media Accreditation - guess what - you get the backhander. ie 2 agencies - identical spend - one gets the backhander - one doesn't. Totally inconsistent.

And lets not even discuss the "media buyer accreditation" dinosaur......

But most genuine 'SEM' companies don't actually get the commission - because they aren't 'accredited media agencies'. Professional SEM agencies totally understand search engine marketing - and typically get the best ROI and the best results for their clients - but they aren't 'accredited old school' 'media buyers' and 'media planner' types.

There is a solid business case for a 'trailing' commission structure (the model used in many financial services markets) to be implemented by Google and Overture for SEM companies, who set up client PPC accounts, and manage these accounts for clients.

A trailing commissions structure process would allow for Overture/ Google to have a direct relationship with the end user client, from a billing/ credit perspective, (which is really what they want) and allow the SEM to add value, and get a small annuity share of the revenues for the customer they introduced and manage on a day to day basis.

The problem is - neither Google or Overture have actually realised the leverage this will offer in the market yet.

The first one to wake up will actually win.....

Last edited by Chris_D : 06-11-2004 at 09:31 AM.
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Old 06-14-2004   #9
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Thanks for all the feedback...

Hi Guys,

I will try and ask for those discounts. I have already talked to Google and as Chris_D said it was impossible for us to obtain that discount regardless of how much money we spend on them.

I hope we have better luck with Espotting and Overture

I will keep you updated!

Thanks again!
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Old 06-30-2004   #10
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Agency commission situation in the UK

As I have spoken with all of the P4P players in the UK over the last few years and my experience is:
- Espotting will give discount based on monthly spend up to 15%
- Overture will but very small (5%) for most SEM's and only raises the bar if you are spending "serious" money (100k+ per year)
- Google will give commission but it you have to be a member of the IPA (Institute of Practitioners in Advertising in the UK) and they will only give it on a case by case basis

Bottom line is if you are spending 100k plus with any engine per year you should get something.

However at my company (Sitelynx) we don't take Agency commission (due to my previous experience of Media Buying) as it isn't transparent with the client. Far better to provide a performance / value based fee to the client so the relationship is strengthened over time.

Another point for the SEM industry is this arrangement is keeping many of the small/medium agencies out of the space as they live off media commission. Therefore it actually can be used as an advantage by SEM's (I know of one top media agency who won't buy Google Adwords unless the client spends minimum 10k+ per month per campaign). This is the only way they get their discount so they just don't buy there!

Now tell me how many SEM's wouldn't use Google in their campaigns.
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Old 08-02-2004   #11
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FYI, both Overture and Google have finally gotten back to me to say that in the US, they aren't offering any type of agency commission payments to anyone.
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Old 08-02-2004   #12
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>you have to be a member of the IPA (Institute of Practitioners in Advertising in the UK)

I know from experience that is not actually the case, though they do say it..
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Old 08-03-2004   #13
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Hey guys,

Check out that website for the "Institute of Practitioners in Advertising UK"!

You have top provide an email address, and a whole pile of personal information - JUST TO SEE THEIR WEBSITE!

Some people just don't 'get' the web, do they..........
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Old 09-28-2005   #14
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Quote:
Originally Posted by dannysullivan
FYI, both Overture and Google have finally gotten back to me to say that in the US, they aren't offering any type of agency commission payments to anyone.
Right! And there seems no way to change that when doing the math. Let's take Google for example:
Net Income for Q2 2005 $343 million
Minus $207.6 million (thinking worst case scenario all of it is commision based at 15%)
-------------------------------------
Brings net income down to $135.4 million
There would obviously be a BIG threat to eat up their profits fast. Not to mention something like this would plunge the stock price very rapidly, bringing market cap valuation down, which wouldn't look good for the new shareholders. They need to keep that relationship stable and neutral-positive.
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Old 09-29-2005   #15
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Isn't 15% of $343 million $51.45 million dollars?

Madison Avenue has loads of money to spend, so kicking back 15% to lure big agencies to spend their money with Google (as opposed to flashy ads on Yahoo) seems like decent ROI.

I'm wondering, how it would be detrimental to Google to spend 15% of gross income from ad agencies in order to grow sales from Madison Avenue? Growth is good. Growth often costs money. So how is kicking back 15% a bad thing?

Yahoo has an easier time of it because their ad units are flexible. Google is stuck with that plain home page. They have to do something to grow sales. I think a decrease in growth may affect their stock price more than an increase of growth with associated investments to fuel that growth. Part of growing a business is spending to fuel that growth. So if the rest of the world does it, why shouldn't Google?

I'm not predicting that Google is going to do it in the states, but just throwing it out there that it seems to me that it's a viable strategy to drive growth.

Last edited by martinibuster : 09-29-2005 at 03:09 AM.
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Old 09-29-2005   #16
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Quote:
Originally Posted by martinibuster
So how is kicking back 15% a bad thing?
well that also locks out many small businesses from being able to compete if all their competitors can buy the same traffic with a more established brand at a discounted rate.

PPC is a game of margins, and 15% is a bunch in that type of game.
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Old 09-29-2005   #17
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I agree up to a point. I agree that it has the potential to cause an unfair playing field.

But Madison Avenue Agencies are free to keep the discounts. It's one way they make money, by arranging the advertising for clients. The angencies will generally keep the 15%, although I've been told that has been changing of late.

I asked caveman about this, as he has a deep experience in the advertising world, and he gave me permission to quote him,

Quote:
They keep it, or most of it, depending upon the agreement with the client. That's how agencies (used to) make money. But that's an older model. Now what often happens is that they keep only part of it, for media placement. Say for example, 3-5%. Then other services, i.e., account service, creative services, etc., are ordered a la carte, and marked up.

20 years ago it was just agencies earning straight 15% commissions. The more a client billed the more the agency took in. So big budget increases were essentially windfalls for the agencies. Which is why clients eventually moved to blended models, or all a la carte.
One other thing to keep in mind is that the big agencies are generally running branding campaigns- they're not looking to convert as much as keeping the product in mind. So in a way, the big agencies and the smaller guys may not even be on the same playing field.

As always Aaron, you raise an interesting point that can't be dismissed.

Last edited by martinibuster : 09-29-2005 at 03:41 PM.
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Old 09-29-2005   #18
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BUT, in markets and sectors where there is dormant ad money that has not gone into search advertising, the agency that delivered significant *new* business to the SE's would actually be helping them increase revenues and profits.

Google no doubt likes to think it can snap its fingers and all will eventually come running to do business directly. It's just not so. Big companies rely on a variety of agencies, some of them for a whole range of marketing services. What the agency says (in some cases), goes. Theoretically then certain agencies can delay their clients' entry into heavy search ad spending (or contextual etc. for that matter) for years.

By making a quiet agreement about commission then, that becomes incremental revenue and profit to Google, not a decrease.

Depends on what angle you look at it, I guess. 15% commissions across the board would of course be a big hit for Google & Yahoo, but it's unlikely to be that drastic. They could have a sliding scale, 5% up to 15%, and that scale would only affect, say, about 25% of the total spend (only certain agency relationships would qualify, and many advertisers are going direct to Google, remember).

Giving a nice bonus payment (free ad credits for example) to all high-spending clients (the non-agency-affiliated ones) on a trailing, semi-annual basis would be another good way to generate loyalty and to thank higher spenders.

So again, financially, I see the impact as neutral or even positive for Google or Yahoo if they implement this. But it gets very political; it would take time for them to sort through cultural & logistical issues; etc.

But an easy way to solve this would be to offer more favorable commission terms to recognizable accredited midsized to larger agencies, and some smaller % (even 3% would be a nice reward) to smaller consulting shops, web developers, etc. that don't quite qualify. This way there is no feeling of being completely shut out of the party by virtue of not being a Big Guy. No Child Left Behind...

Quote:
Originally Posted by Nacho
Right! And there seems no way to change that when doing the math. Let's take Google for example:
Net Income for Q2 2005 $343 million
Minus $207.6 million (thinking worst case scenario all of it is commision based at 15%)
-------------------------------------
Brings net income down to $135.4 million
There would obviously be a BIG threat to eat up their profits fast. Not to mention something like this would plunge the stock price very rapidly, bringing market cap valuation down, which wouldn't look good for the new shareholders. They need to keep that relationship stable and neutral-positive.
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Old 10-03-2005   #19
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What great timing

The agency discount model is being changed in Europe from the beginning of January 2006. The announcement was made at ad:tech in London.

Being one of the agencies affected by it you can imagine how great it felt to be told at the same time as everyone else, and an hour after Google held a press conference to tell them. Clearly, this is going to affect the press much more than an agency that received the discount currently.

The model is one that is always going to cause consternation between those that get it and those that don't. I don't envy the position of trying to create something fair and equitable to all parties. But at least consultation with the parties might have been a good starting point.

We receive it and as a result we have been able to recruit more staff without having to pass on the costs entirely to the advertisers we work for. In most worlds that makes us a VAR (Value Added Reseller). We sell Google's services (and others), and receive no form of commission payment for the new client per se. All of the monies Google receive from our clients is from advertisers they have never had a relationship with before. It's new money and they get to keep 85% of it and the clients are happy, everyone wins.

The agency world have helped to create the market and the position that Google hold. Strip out the numbers from the balance sheets of agency introduced business and there is a big shift in momentum. Add on the extra manpower and office costs that are stripped from Google's balance sheet by virtue of this.

The reason given for taking the discount away is to make the auction a consistent one for advertisers, but in reality the pendulum is going to swing either towards the client paying an agency directly for the services, reducing the ROI or for the clients to go directly to Google for services. Recruitment is no easier for Google than any one else in the space (well OK maybe a little bit).

I am actually in favour of the new scheme, in that it is transparent and although the details are not yet publicised it should favour those agencies that are reasonable in size, with good business models and charging structures. For those that did the work purely for the discount and nothing else there will be a lot of thinking to be done.

The ambiguous nature will be gone (in Europe at least). I thought the way it was announced was one of the worst communication events I have ever seen.

I firmly believe that there will be significant consolidation and mergers because of this move, which can only be good for the end user, but as far as being a fair auction model.......... not a chance.
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Old 01-16-2006   #20
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how can I get Discount On Googe Adwords

So from all I read out here, there is no chance for a small, but growing SEM agency to get any discount from Google ?!
They know we don't have much choice, so why pay us something?

This is really stupid
We have Advertising Agencies working with us, asking us to take care of all the SEM area for them, as part of the over all marketing effort for their customers.
This is actually our strategy:
Support the over all marketing effort through Advertising agencies.

So, all I have to do is ask the Advertising Agency to buy the media for me?
Then we will have the chance to get anything from Google?


can anyone clarify on that claim ?
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