Pay-for-performance SEO

Dec 01, 2010 10:30 PM  By

Search engine optimization is often this mystical and inscrutable process that takes place in a black box. You pay your SEO consultants a considerable sum, they do whatever it is that they do, and then you cross your fingers and pray that your investment pays off. If initial efforts don’t yield the results you’d anticipated, you cough up more money and keep hoping for the best.

The problem is that many SEO firms have adopted the traditional “dollars for hours” way of doing business. Since the impact of proper SEO isn’t immediately apparent, it can often feel like you’re throwing good money after bad.

This unease can lead to a self-fulfilling prophecy. If your SEO consultants aren’t able to demonstrate the value of their efforts, you may feel inclined to reduce funding. Without sufficient resources, your chances of seeing any results will continue to dwindle until you inevitably cut your losses and do away with SEO altogether.

But what if you could actually see some tangible results from your SEO efforts? What if your SEO costs weren’t based on the firm’s man-hours, but rather on the value of its deliverables? What if you were paying, not for work, but for results? The obvious solution is a pay-for-performance pricing model, similar to pay-per-click. A number of SEO firms have tried to put some form of this model into action, but these implementations are often fraught with problems.

It’s a trust issue

The main issue is one of trust between the SEO consultants and you, the client. The SEOs could potentially spend hundreds of hours doing the legwork, gathering the data, and making the necessary recommendations.

But if you choose to disregard these suggested modifications, or if your IT team fails to implement them properly, your poor consultants are simply out of luck. In effect, they’re betting their paycheck on whether or not you’ll take their recommendations seriously. This is why most — if not all — SEO firms still charge flat fees for their initial audits and monthly retainers for their ongoing consulting work.

In order for your SEO experts to get full buy-in from you, they’ll need to demonstrate exactly what you stand to gain by implementing their suggested measures. And the only way to do this is to come up with a clear and comprehensive set of metrics that can objectively track and measure the efforts and results of SEO.

Not only would this help convince you that SEO is in the best interest for your business, it would also provide the SEO firm with some concrete metrics necessary for the PFP pricing model.

Web analytics vs. search analytics

Traditionally, SEO firms have used web analytics as a metric to demonstrate their effectiveness. These measurements, unfortunately, tend to undersell the efforts of SEO and aren’t all that useful for plotting strategy.

Web analytics are designed to tell you how well your site has been doing, as opposed to how well it could be doing.

Since the impact of SEO activities can be hard to isolate, your SEO consultants may have a tough time convincing you that an increase in traffic is a direct result of their changes — or that an unexpected drop in visits was not caused by their changes.

A number of search engines and third-party services have started providing useful search and predictive analytics. Metrics such as search result and advertisement history, search volume trends and analysis, website comparisons, keyword monitoring, and reverse searching (where you type in a website to see its keywords) can all be used by your SEO experts to study your site’s performance and ranking in the search engines.

What’s more, these metrics give you something concrete on which to judge the results of your SEO initiative. Rather than relying on an SEO expert to explain the often tenuous connection between his efforts and a slight surge in traffic several months later, you can see the direct correlation yourself.

So how exactly would pay-for-performance work? SEO success isn’t generally judged on a pass/fail basis, but rather in a measure of degrees. How should the SEO firm gauge the level of its success? Some possible options:

  • SEARCH ENGINE RANKINGS

    This seems like the most obvious metric for measuring the success of an SEO campaign. In its simplest form, you and your consultants set goals for the performance of your various keywords on one or more reputable search engines. When those goals are met, the SEO firm bills you a predetermined amount.

    The process isn’t quite so cut and dried, however. Some keywords are simply too competitive, and it may take a long time for a page focused on them to rise in rank. And even the most gracious and kind-hearted SEO firm is going to balk at waiting a year or more for payment.

  • WEB TRAFFIC

    When a website’s traffic is measured, the numbers can be a bit volatile from day to day. But examining the traffic over time can give you a good idea of overall growth or decline. Should you agree to pay for an increase in traffic, you and your SEO firm will need to come to an agreement on a number of parameters.

    • What percentage of the visits should be disregarded as junk traffic?

    • How long does a visitor need to remain on the page for it to count?

    • Are you paying a set price per visit, or a set fee for an increase in percentage?

If you plan to launch any initiatives that will impact search-delivered traffic, you’ll probably want to exclude that from the formula. It may prove difficult to isolate the effects of your internal team’s efforts vs. those of your SEO firm, however.

For example, if you acquire links and so does your vendor, whose links actually moved the needle in terms of traffic, and to what degree? It’s not a simple matter of looking at the direct clicks from the links or the PageRank score of the linking pages.

The way the SEO firm that I founded (Netconcepts) tackled this thorny issue and provided pay-for-performance pricing was by running optimizations through a proxy-server-based solution (originally called GravityStream, now Covario’s Organic Search Optimizer). All clicks to the proxy server were then counted in this cost-per-click (CPC) pricing model.

A key side benefit to the merchant: It provides a mechanism for the SEO firm to implement SEO changes without having to do major surgery to the ecommerce platform to achieve such things as optimized URLs. Ironically, clients found this pricing model less interesting once the recession hit because, with strict budget caps, it was hard to budget for the open-endedness of such an arrangement.

Third-party benchmarks

Google offers a PageRank algorithm to assign a numeric weight to your page based on the number of links pointing to it. Alexa collects and sorts data from a variety of sources (including users who have its toolbar installed), and uses this information to assign a ranking to your site. Other companies, such as comScore, Hitwise and AdGooroo, monitor search engine traffic and collect data from ISP networks to provide search analytics.

The real value of some of these metrics is up for debate, and the data from one company will often contradict the data from another. Before choosing this option, you would first need to work with your SEO firm to select a specific metric or set of metrics, and make sure you understand how those measurements tie into your SEO efforts.

Conversions: If part of your SEO agreement includes a guaranteed boost in sales, referrals or some other conversion event, the firm could conceivably use those numbers to gauge its success. Admittedly, a lot of SEO consultants would be reluctant to commit to this type of project, as their goal is primarily to drive traffic to your website. Whether or not the customers are buying your product is pretty much out of their hands.

There are still several flaws to overcome, but true pay-for-performance is soon to become a reality. Despite some initial resistance, many SEO firms are starting to notice the competitive advantage that pay-for-performance could give them over their rivals.

With a pay-for-performance model in place, the SEO firm’s best interests are aligned with your own. The firm like you, will be rewarded only for results that can be quantifiably — and objectively — measured.

Stephan Spencer is co-author of the O’Reilly book The Art of SEO and founder of Netconcepts (acquired by Covario).