PPC search agencies in jeopardy

The future of Pay-Per-Click (PPC) search agencies is in jeopardy, according to Mark Kuhillow, managing director of R.O.EYE.  Restrictions in agency commissions are already being imposed on search agencies and Google’s Cost-Per-Action proposal further emphasises Google’s desire to trade directly with advertisers. Affiliates will step into the space between Google and PPC search agencies, to offer risk free search bidding alongside payment-by-results, as performance marketers.

“The move to end agency commissions will mean a dramatic change in search remuneration models and a need for search agencies to adapt their business models. At the same time, affiliates are offering marketers an opportunity for risk free search marketing,” warns Kuhillow.

PPC commission is at risk. Google has now announced that is Best Practice Funding (BPF) payment model will cease at the end of 2008, and search marketers are already starting to feel the pinch in their commissions. Together these changes will see search marketing brought in-house, managed on a fee basis or outsourced to affiliates.

Affiliate PPC models do not rely on search commission and have proven to be hugely successful. “Using ‘super affiliates’ for search management will be a big draw for marketers wanting to tie search marketing closer to results-based models,” says Kuhillow.

With the affiliate industry reaching the £2 billion threshold in 2006, advertisers and marketers alike are looking for closer relationships with ‘super affiliates’ - accounting for 20% of the affiliate market but responsible for 80% of the volume.

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‘Super affiliates’ are already making moves to develop stronger client facing structures. As brands demand closer relationships with affiliates, they need a higher level of account management services. “And ‘super affiliates’ are more than capable of picking up the reins, while search agencies come to grips with big structural changes ahead,”  concludes Kuhillow.

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