Google has reportedly begun talks with search engine marketing agencies over the future of their Best Practice Funding commission structure, according to New Media Age (NMA 30/08/07).
Traditional agency commissions were abandoned two years ago to implement a structure that aimed to reward agencies for growth and in order to prompt agencies to invest in training. Last year the system was updated to reward any agency that grew 15% quarter on quarter.
Best Practice Funding has been criticised since its inception, initially due to the lack of clarity in the tiered commission structure and later for the discrepancy in how agencies were being paid. The main objection to the system was that agencies channeled the funds straight back to the clients, using the commission as a discount / savings on the cost per click to lure clients.
Offering a discount on click costs in itself is not a bad thing. However, it prompts clients to select agencies based on the size of discount they can offer rather than on the quality of work done.
While Google has not made any official comment on this, they are expected to announce something in October, as they have for the past two years. SEMs are speculating, though, that Google might scrap the Best Practice Funding system altogether.
Does this mean that they will stop paying ad agencies any commission at all?
That is rather unlikely. What is more likely, though is that the advertising giant may now pay standard tiered commission rates, like most ad networks do, and might provide an additional incentive to agencies that perform well.