Why Performance Based SEO Deals are a Bad Idea

 

In our opinion it is rare that a good SEO agency will offer a results-based fee structure due to the following three key reasons:

SEO results are heavily dependent on many factors outside of the control of the SEO agency
      • Development work to implement technical recommendations
      • Publishing of new pages and content
      • In-house development teams creating new SEO problems with site changes
      • Google updates around things like duplicate or thin content
        • of course a good SEO agency will make recommendations to limit this, but for some sites we could be talking about rewriting thousands of pages
        • this means there is a period of higher risk if those pages are kept in the index

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SEO has a big delay from implementation to traffic and revenue
  • This could be anywhere between 6 - 12 months for many clients if a natural strategy is taken
  • Generally, SEO also requires a bigger initial investment in technical and on-page work
  • Therefore, for a performance deal, an agency would make very little in the first 6 -12 months
  • The agency would, however, then see a big increase in performance in year’s two and three, and the agency would then start to make a profit
  • The client, however, is in a position to end the contract after the main work has been done, and before the increase in traffic/signups/revenue is seen
  • This would mean the agency would make a big loss on the deal
  • The only way around this is if contract stated that the agency would continue to be paid out 6 – 12 months after the contract has ended
Performance based results drive the 3rd party agency to short term wins or even ‘black hat SEO’
  • This often means that the SEO agency employs risky, paid tactics which increase traffic quickly
  • SEO agency as a result gets paid a higher monthly fee
  • However the black hat tactics will eventually result in a penalty
  • SEO agency would most likely get fired, but has already been paid well

It is, however, possible to construct a contract between the agency and the client that does try to manage these three areas and:

  • Has a number of caveats that the client must adhere to, and if they don’t the fee defaults to an agreed retainer
  • Has a payout for an agreed number of months for results after contract is ended
  • Has some agreed  measures of quality in work carried out to protect client from bad SEO tactics by the agency

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As an agency ourselves we have tried on three previous occasions to construct a deal of this type, and in all cases the contract took a significant amount of time to work on, and only once did we actually proceed, due to the complexity. Within the first month of that contract starting multiple caveats in the contract were broken and we had to default to a standard retainer.

Therefore it is unlikely that a good agency will ever push this type of deal, and as a client you should push for this carefully. The preference should be for the agency to prove their ability through references and case studies, and ensuring that the relationship between agency and client has a really tight set of objectives as well as very good reporting in place for evaluation. It’s also important that there be a contract with no long term tie ins, and an easy break clause to activate.

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Darren Sheffield is head of SEO and Social here at The Media Image. With over 12 years in the SEO, social and wider online marketing and web development field, Darren brings the required experience to lead TMI’s ever expanding team.

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  • http://www.clayton-nichols.com/ Clay

    I like this article. Specifically because I know of a few companies who push the you don’t pay us unless we get results for you, and knowingly spam traffic and pay for backlinks on garbage sites like Fiverr.

    • http://www.the-media-image.com Darren Sheffield

      Thanks for commenting Clay, I’d definitely agree if you push for short term performance in this way you could be also pushing your agency to short term SEO tactics such as spamming traffic and bad links.

  • http://hatimotarid.com Hatim Otarid

    Many clients want results before spending a dime, and have no idea about the real complexity of SEO. Thank you for the great article!

    • http://www.callboxinc.com/ Belinda Summers

      As SEO practitioner, it’s our responsibility to explain to them that the result of building links won’t bring them instant ROI as they expect it to be. A good SEOer does not guarantee anything to their clients but will only prove to them that search marketing is the best marketing strategy to invest on. Good point @hatimotarid:disqus.

      • http://www.the-media-image.com Darren Sheffield

        Bang on – I’d add that a good SEOer would have happy clients that a potential new client can and should talk to. We actively push new clients to talk to our current clients for this reason.

    • http://www.the-media-image.com Darren Sheffield

      Thanks for commenting Hatim, and glad you found it insightful.

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  • http://chuckreynolds.us/ Chuck Reynolds

    hah. been saying that for a looong time. years on years. But good post to reinforce it.

    • http://www.the-media-image.com Darren Sheffield

      Thanks for comment Chuck, yep nothing new here, the original point of this article was actually just for us to reference when we are asked for this type of deal so we had a more detailed explanation.

      • http://chuckreynolds.us/ Chuck Reynolds

        Yup! I intend to do that quite often… but I’m not good at it lol. Cheers

  • Shopping4online

    This great article ! ! ! Yes, many more client and CEO want a before result for investment or one to two months…. But don’t understand of latest complexity of search engine + Technical + Link Building and many more…

    • http://www.the-media-image.com Darren Sheffield

      Its fine for client to want and expect results, and onus is on agencies to explain the reasons why there is a latency to results. Unfortunately the darker side of SEO use strategies and then sales tactics that contradict this

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