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Old 11-04-2004   #1
grnidone
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Ethical Issues of PPC Management for Multiple Clients in the Same Field

I am doing PPC buys for two companies. To manage the PPC buys for our clients, we charge a percentage of the total PPC spend. (Of course, we stay within a budget that is dictated by the client.)

Company A: is an insurance company. One of their 'bread and butter' products is Medical Evacuation Repatriation -- that is -- if you get hurt and you are over 100 miles away from home, they will cover evacuation for medical care.

Company B: is a company that sells discounts on medical care. It is not an insurance company, but one of the many services they have is Medical Evacuation Repatriation.

Because the company I work for makes a percentage of the total spend, we could, conceivably bid these companies against each other for the same terms, thus increasing the spend for both companies, and thus making more money from both.

In my mind, bidding two clients against each other for the same term -- particularly if this is something that positively affects my bottom line -- is not ethical behavior. It seems like a conflict of interest. However, perhaps this is just business as usual.

What I have chosen to do in the above situation is refrain from purchasing 'Medical Evacuation Repatriation' type terms for Company B. Because this service is not their main service offering, it seems most ethical not to buy the term at all.

Has anyone else had an issue like this? What do you do when you have two clients that are bidding in the same PPC space?
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Old 11-04-2004   #2
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We have always made it our business to avoid any conflict of interest. We only have a single customer from any given market segment, and we try to keep these relatively broad.

I dont' envy your situation, but it sounds like you've made the right choice. It would certainly be a mistake to bid them against one another.
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Old 11-04-2004   #3
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Honestly, I kind of wonder if I am being a prude.

The fact of the matter is: those companies are competitors for those search term. If there is one SEO firm controlling the bids or two, they will still compete for that business.

I am sure there are big firms out there who deal with this type of conflict all the time, and I am curious to see what they do about it.

Do you disclose this to the clients? What about if company asks me why I did not bid on 'repatriation' type terms? Honestly, I'm at a loss here.
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Old 11-04-2004   #4
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I have never been able to understand why some would limit their potential in a given industry to only one client. I don't have anything against this type of model and can understand the reasoning behind it, I just don't agree with it for myself. To me, it puts your business at a serious disadvantage. I have always represented many clients from the same industries at the same time. I just don't lie to them or cheat them. I do the best I can with the budget given to me on a case-by-case basis.

To me the answer is simple. Don't make it an ethical issue.

Do the best you can do
be proud of what you do and
do what you say you will do

and there should not be any question of your ethics. If one client wants to be on top badly enough, then it is his responsibility to instruct you of his wishes. If both clients tell you the same thing, what difference does it make whether you are placing the bids or someone else is? If I outbid you, would your client expect you to get into a bidding war with me? Why would it matter to either client. You are only doing as you were instructed.

Now, that is just me. The bottom line is not how I feel, rather how YOU feel. If you feel it is dishonest, then don't do it. I run my business as my business. I don't discuss the details of one client with another and if asked, I tell them I don't discuss other clients and they wouldn't want me talking about their site to a competitor so they respect that approach. Of course sometimes it does come up but I don't deny, I just don't discuss.

I believe that by seeing handling two competitors as a conflict of interest, you have just raised your costs and lowered you margins by a considerable amount. I have found that experience with one set of keywords allows me to offer my services in that arena at a lower cost with a higher margin. My expenses are always greater with NEW projects. The research and trial and error process is expensive, labor intensive and time consuming. Cost, cost, cost. Once I find the right formulas for debt, or gaming or dating, (all stuff that no one who is number 1 when I get there is going to just give to me, you have to take it), the second and third sites come faster, easier and cheaper for the same type of keywords. I don't see it as a conflict of interest. I see it as an experienced staff offering more value to a prospect than a competitor. But that's just me.
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Old 11-04-2004   #5
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I can see your point, Massa.

And honestly, if we charged a flat fee for PPC management -- ie a fee that was *not* based on how much is spent -- then I'd see nothing wrong with bidding two clients on the same terms.

Frankly, It is not so much ethics as much as I don't want to get sued.

Last edited by grnidone : 11-04-2004 at 06:17 PM.
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Old 11-04-2004   #6
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Lord knows I'm not a lawyer and most of my legal experience has taught me that experience is what you get when you're expecting something else, but I don't see any way you could be sued unless you were intentionally bidding one client up for the sole purpose of raising the bid on the other and increasing your own commissions. That's is not an ethcial dilemma, that is lying, cheating and theft.

If it is a concern that you're just not comfortable with the situation you would have little choice but to apprise one or both of the clients of the situation possibly losing one or both of them. You could possibly give one account to a friend or someone else in the industry for a percentage as another option. If you need my nubmer pm me.

As for me, I would just advise both where I thought they could actually perform better with different sets of keywords, different strategies and that settling for a #2 here and being #1 there could make them just as much profit as being #1 in both places.

I really do completly understand your dilemma. I had to deal with it myself long, long, ago when I was but a young SEO neanderthal. To be honest, I took the approach that randfish does and just told clients we didn't accept two clients targeting the same keywords. Then one day I realized that I just sent that client to a competitor who didn't have to struggle with their conscience as much as I did. From then on, I finally realized that the odds of one page being in the exact same position across all available traffic sources was very remote. So remote that it hasn't happened yet in over 6 years. I don't have clients cancel because they don't have a number 1 and someone else does. I have clients cancel because they don't make enough profit to justify my fees.

Since I changed my way of looking at it, I was able to see that I was doing the prosepct a dis-service because I "knew " I could do the job but I didn't "know" that whoever else the client may choose could do as well. I was then able to speak to the client more about how I could help them with increased traffic and conversions as opposed to my other client wouldn't like you being number 1.

Sounds to me like you have your head on straight and just by asking the question you obviously have a desire to do the right thing. I'm confident that whatever you decide to do will be the right thing for you and probably your clients as well. I hope whenever you do make up your mind, you'll let us know what you decide. I for one would like to know.
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Old 11-04-2004   #7
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I refuse to work for competing sites...I think it puts you in a position where it will appear to some that your motives are not that of a good partner.

there is enough fish in the sea that I would not want to work for two direct competitors. I am but a single person though. If I were a larger more profit driven company I am not sure I would be able to do that.
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Old 11-05-2004   #8
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Personally I don't have a problem servicing competing companies at the same time. At one point, some years ago, I was consulting 3 large, and competing, search engines/portals at the same time I performed SEO in the same engines. They all knew it and none of them had a problem with it because they knew how I deal with confidentiality.

I still service competing companies. I only have one, old, exclusive deal on a very specific vertical and local market, but thats mostly because of personal relationships with that company and the fact that such a small vertical.

Some companies still ask for exclusivity but it usualy ends when I tell them what it will cost. Usually I would say 4-6 times my normal rates and nobody wants to pay that (I am pretty expensive as it is)


Some PPC-management tools have what some call "friendly sites". This function secure that you are not overbidding multiple clients with the same keywords. Off course, the PPC-engines may not like this as you remove some of the auction style to the bidding but my loyalty is with the clients so that won't keep me up at night
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Old 11-05-2004   #9
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Quote:
Originally Posted by Mikkel deMib Svendsen
Some PPC-management tools have what some call "friendly sites". This function secure that you are not overbidding multiple clients with the same keywords.
what all tools do that.
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Old 11-05-2004   #10
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Its really a matter as to what you are comfortable doing, and what your clients are comfortable with. I think it boils down to trust.

Personally - if I was using an agent to bid at an auction for a real estate property - I really wouldn't be comfortable if that same agent was also bidding on behalf of another potential buyer for the same property. Sure - two separate bidders at the same auction making bids separately could lead to the same outcome. But I wouldn't be comfortable with it.

Our company position is that we won't take on a new client that conflicts with an existing client. We declare our existing clients up front to prospects where there could be a conflict. That business model is our choice.

There's a huge market - our position is based on the Advertising industry model. If you look at it from the client perspective - in my experience - many corporates don't want to deal with you if you are also currently working with one of their competitors.

I know our clients respect us because of this position. Personally, I have found that clients are much more frank and open with us regarding their future business plans and strategies - because of our 'no conflict' position. They treat us like a 'partner' rather than just as a 'service provider' - and trust always leads to new business opportunities.
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Old 11-05-2004   #11
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I don't think the estate analogy really hold because we are not talking about one property here (keywords) but an almost endles list of keywords - and new keywords are appearing all the time. Also, most companies do not want to spend the budget it takes to secure top position for all avaliable keywords so there are plenty to spread around.

Also, I found that a lot of the high-end consulting I do I actually do get hired because I did, or do, consult competitors. With the kind of specialised consulting I do they just can't find many others that have the needed experience. I mean, how do you get specialised experience in a small field? By working for the competitors
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Old 11-05-2004   #12
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Hi Mikkel,

Maybe you were rushed when you read my post. I think you may have missed a couple of important words.

Quote:
Our company position is that we won't take on a new client that conflicts with an existing client.
'Existing'

Quote:
many corporates don't want to deal with you if you are also currently working with one of their competitors
'Currently'

Quote:
same agent was also bidding on behalf of another potential buyer for the same property
'same property' (singular)

You said:

Quote:
one property here (keywords)
No Mikkel. Thats not what I said.

One property = keyword (singular)

Please reread my post above. I felt I had been reasonably straight and factual.

I'll restate it. Its our company position that we don't work for two competing clients AT THE SAME TIME.

What I don't understand from your post is - if you work for two clients who are competing - in exactly the same market - then why aren't their keywords identical? (Please note my use of the word exactly.)


Last edited by Chris_D : 11-05-2004 at 09:05 AM. Reason: Clarification/ typos
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Old 11-05-2004   #13
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Actually, I think I got it right

Quote:
I'll restate it. Its our company position that we don't work for two competing clients AT THE SAME TIME.
That is exactly what I, and some others do. I do work for competing companies at the same time. I have yet to meet a client that want to pay the mark up it takes to keep me exclusive (besides, that one old friend)

There may be special situations where I chose only to work one client within one vertical. I have one like this in a very competitive market that I've done for 2 years. But thats my choice - nothing in the contract say I am not allowed to and the client never asked for it.

Anyway, I think this just proofs how different our businesses is in this industry and I actually believe thats good. Some want it your way (allthough, they don't get around to me apparently ) and some want it my way. As the market is going now it seems there are plenty for all.
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Old 11-05-2004   #14
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the hanes version

I'll keep it "brief" Many excellent thoughts in here and as usual massa offers deeply profound advice. Yet I have made my mind up the first time this issue ever came up about four years ago. It is based solely on your own morals, so this is obviously an opinion that may not be shared.

grnidone I feel almost exactly as you do. With a "percentage" client I would not bid for the same terms. With a flat fee client, I would consider it.

To deviate very slightly, if the one client had good natural rankings then I could bid them in the 5-8 position range and the other one in the 1-3 range. I am currently bidding in a very competitive field in the 5-8 range in order to cover the "below the fold" visibility for a high-performing (organic) client. This works very well, IMO. I would consider taking a PPC client to bid on the top in this situation, because I am sure it would not effect the original SEO/PPC client.

Last edited by Chris Boggs : 11-05-2004 at 09:33 AM. Reason: typo
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Old 11-05-2004   #15
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I have heard that some of the larger PPC companies never allow the same "team" within the organization, manage two different companies targeting the same industry. This way they are not really bidding against themselves, as an individual.
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Old 11-05-2004   #16
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Rusty, from an advertisers point of view it would make a lot more sense if you took all the banks and I took all the insurrance companies. Then we controll the listings and can set the price as we want (low). But I guess the engines wouldn't like that too much

I am not sure, is that what you would call "black hat PPC-management" ?
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Old 11-07-2004   #17
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% of adspend

Going a little off-topic, it seems to me like charging a percentage of total spend is a bigger mistake. I've never been a big fan of this model, because it seems it would promote irrational spending on high CPC phrases for *ahem* branding. It seems to shift the focus off conversion where it should be, and on to spending as much of the clients money as possible. Perhaps you just have to have a very high level of commitment to the client to maintain this model efficiently.

>Do the best you can do
be proud of what you do and
do what you say you will do

Well said, and I think you are on pretty fair ground. You may want to mention it to a client, as long as you don't do anything stupid like outbidding one another and driving bids up just to increase your spend you are really not doing anything unreasonable. From one perspective, they are actually GAINING by you educating yourself about their industry from their competitor. As Mikkel was saying, you may be an expert in a given industry BECAUSE you have learned from their clients. At the end of the day you need to do what is best for your company while still offering fair services to your clients, and reasonably limiting your liability.

If you always root for the white horsed hero in movies, you may want to just tell the second client that they will have to take second billing on that particular product/ service (or even that you just won't promote it), or ask the first client where they're priorities lies. Since most customers aren't concerned with ALL of their offerings, they may not even place a high level of importance on that given service. If they are a loyal or reasonable customer they will most likely respect your business ethics more than they are disappointed with your decisions. Don't miscommunicate or mislead as Massa mentioned and you will be doing right by your clients.
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Old 11-07-2004   #18
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Quote:
Originally Posted by Mikkel deMib Svendsen
I am not sure, is that what you would call "black hat PPC-management" ?
Oh great...
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Old 11-08-2004   #19
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Listen to the data

For us, the notion of a conflict of interest when managing 2+ clients whose keyword sets overlap is a non-issue. If you make decisions on which keywords and what bids based on cold, hard cost, revenue and profit data for each client, then you can't help but be impartial. Knowing what keywords, click thru rate, conversion rate and margin different advertisers get on different keywords doesn't really let you take data from Peter to help Paul - unless Paul's campaign is a brand spanking new one. In almost all cases, each client has unique CTR, CR, margin and product mix such that the only data that matters in making PPC bidding decisions for them is their own data.
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Old 11-10-2004   #20
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in my opinion, when offering services in this space exclusivity by vertical is important specifically because of the intimacy with which you get to know a particular client's business. how can you work closely with two clients who are direct competitors and have them both be comfortable with that situation, particularly when you are leveraging intimate business data to achieve each client's goals?
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