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Why Performance Based SEO Deals are a Bad Idea

June 11, 2014
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
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
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.
Tags : Seo
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