Walk around the halls of any ad agency and you will hear a wide array of colorful language more suited for a locker room than a place of business, but the dirtiest word you are likely to encounter is the dreaded “procurement”. This word universally sends shivers down the spine of anyone that’s had the pleasure of negotiating scopes of work and more precisely, the agency fee associated with said document.
I do not claim to offer a surefire cure for the pain of scoping negotiations, however the best remedy to steer clear of “procurement hell” lies in the art of the scope. And while I can wax on poetically about the importance of defining and outlining objectives, tactics, goals, deliverables, timelines, blah, blah, blah, let’s cut to the case – agency fee model is the biggest hurdle we encounter. The question we must answer is what is the best pricing model for agencies and clients alike – a retainer approach or an hourly bill model.
Now I’ll be the first to admit that an endorsement for a retainer approach sounds a bit biased coming from the agency side. But when compared to a billing by the hour model, that tends to be the option of choice from your friendly neighborhood procurement person, the retainer approach offers benefits that stretch well beyond cost alone.
Why you ask? Let’s say you have a household project that does not fit into your expertise as a proud, do-it-yourself homeowner. And let’s also assume you don’t have the time and/or equipment to accomplish this project. What gives you more comfort in dealing with a general contractor – a flat cost based on competitive marketplace considerations or the unknowns of paying an hourly rate with variables such as undefined timelines, non-guaranteed staffing (workers) and the inevitability of cost overruns.
Flashback to the agency world – the reality is staffing is lean even the best of times. Agencies do not hire ahead of the curve and we are not built to have employees sitting on the sidelines waiting for their next assignment. A retainer approach secures resources by locking in a team and reducing variables such as waiting on team members assigned to multiple projects (i.e. extended timelines and billable hours) as well as the removal of any incentive on the agency side for efficiency of timing. The best agency/client relationships are based on continuity – we are service organizations at the heart and if it’s my money, I want the best talent with the least amount of risk for turnover. The promise from the agency side is that a retained team will provide dedicated resources and that promise must be kept for this approach to work.
So while procurement may never be an enjoyable process, the pain can be minimized when we are able to provide competitively priced dedicated teams that are set up for success. And isn’t that what both agency and client ultimately want to achieve?
There was a time when most search marketing agencies used the traditional advertising agency model and charged a percentage of their client’s advertising spend. Over time, many realized this form of payment actually dissuades your client from administering their budget effectively or efficiently and incentivizes quantity rather than quality of work or results.
Today, the prevailing pricing methods for search agencies are monthly retainers or hourly bills. Which one is right for your agency? How do you determine the best pricing model for both your agency and your client?
To answer this, ask yourself some questions about your client and the work you’ll perform on their behalf. Does your client have a set budget for your work? If so, they’ll insist on staying within that budget and will also likely want to spread that cost over months. If so, a retainer will work best.
Retainers, when staffed correctly, allow agencies to commit resources to the client, enabling them to work on client projects and tasks at any moment in time. They enable brand managers to have a focused, knowledgeable team that in essence becomes an extension of themselves. Retainers, thus, permit energy and focus to be on critical thinking, rather than on hours billed or time and resource constraints.
The retainer price will be based on several factors, including services performed, anticipated number of dedicated hours per resource, and overall budget. It’s essential that the agency price the retainer effectively. Thorough and transparent collaboration between the agency and brand will result in a properly staffed, timed, and billed retainer agreement that will benefit both agency and client.
The hourly rate pricing model has certain advantages as well. It’s simple to calculate and understand and provides both agency and client an opportunity to test each other out. Neither side may be willing to commit to a long-term relationship without first knowing that their work styles are compatible.
The hourly rate pricing model works best when clients require semi-regular task-oriented work. It’s not optimal for clients who require full-time agency support. Likewise, if the client doesn’t have the wherewithal to support working with the agency on a full-time basis, which requires a significant time commitment, both parties will be served best by an hourly rate price model.
If clients choose an hourly rate price model, they need to understand upfront that the agency will not allocate resources to projects until an agreement is in place. This agreement should come with an understanding as to when the work will be performed and when it will be completed. Agencies are not expected to “drop everything” as they typically would with larger retainer clients.
Another consideration is that agency hourly rates tend to be priced higher for short-term projects. Retainers give agencies more flexibility to offer blended or reduced hourly rates in return for the longer term commitment.
Most typically, a combination of retainer and hourly rate will meet the needs of clients and agencies. Any work deemed above and beyond the retainer agreement will be billed hourly. Dedicated resources still will be allocated, but those resources will bill any hours above the agreed-upon retainer allocation at an hourly rate.
Which model do you prefer? Share your experiences in the comments below.
Are you diving into the world of consulting? Determining your hourly rate is tricky, especially for those new to the world of consulting.
Here is a list of questions to help you begin to establish a rate that meets your financial objectives while keeping your client’s budget in mind.
What is your specialization, and how rare is your skill set?
Two very important factors that influence how much you can charge for your services are your specialization and the scarcity of the services you provide. If you are one of a select few who have your skill set (and you can prove it via customer testimonials, certifications, and specialized training), you can charge more for your services. Keep this in mind as you develop your practice. Generalists are a dime a dozen. If you want to maximize your income potential, specialize in one area of digital marketing services, and do it better than anyone else.
What is the average hourly rate for your services in your local geographic area? Base your rate on what your local market will bear. Don’t overprice or underprice the market, unless you have a very specific specialization or you are just starting your business and have a need to prove yourself to prospective clients.
What is the age of your business? As stated earlier, young businesses might want to set their prices at the lower range of the local market. Older businesses, with testimonials from well-known brands, might consider charging above the mid-range of the local market.
What are your financial objectives? If you’ve determined your annual financial objectives, you can do some simple math to determine your hourly rate. If your objective is to earn $100,000 per year and you plan on taking two weeks off for vacation, you can start by equating an hourly rate as:
$100,000 / 50 weeks per year = $2,000 per week
Assuming you work 40 hours per week, your hourly rate is $50 per hour.
Keep in mind some of the factors above to determine if this figure should be adjusted upward or downward. Remember to consider and account for billable hours per week – not all 40 will be billable, or you may need to work additional hours to manage administrative and business issues to achieve 40 billable hours in a week. Also, factor in your expenses. Many consultants, regardless of industry, double or even triple the base hourly rate to get a net figure to charge customers. If this rate does not equate with what the local market will bear, or with your experience level and your level of specialization, you may need to adjust accordingly.
As you determine your rate, it is important to remember not to devalue your business or yourself. Be prepared to justify your rate. Ways to justify include providing references, white papers, and examples of your success stories. Your clients should be your biggest advocates. Don’t be afraid to ask them for references when you are trying to acquire new business.
The only time you should consider reducing your rate is if you believe the prospective client is trying you out before committing to a much larger budget and will provide you with a steady income in the future. If clients push back with regard to your rates, offer them additional services at the same rate, rather than devaluing your service. Another option would be to offer a reduced rate only if the balance of the bill is paid in advance. Be flexible, yet steadfast.
Pricing is a lot like marketing itself. The best results usually come from a deep understanding of your market and testing different things in order to come up with the perfect mix. Good luck, and enjoy the ride.
How did you determine the rate for your consulting services? Share your experiences in the comments below.
In our last blog post, we discussed optimization strategies for your video content. By providing visitors with compelling titles, descriptions, and tags, you are providing YouTube’s search engines with the triggers to support your optimization efforts. Like the content triggers discussed earlier, there are several engagement factors that are influential in getting your videos to the top of YouTube.
Much attention has been paid to Google’s ranking factors and algorithm and how they impact your positioning on Google. By becoming aware of YouTube’s ranking factors, you could improve your video’s rankings on both YouTube and Google. Here are some critical engagement factors that influence your video’s YouTube ranking:
1. Trust and authority of your YouTube channel
YouTube prefers video producers that routinely produce quality video content. Thus, it looks not only at engagement of individual videos but also at engagement of your video channel overall. Factors such as number of subscribers, number of channel views, and the overall age of your video channel are important in ensuring consistently high ranking videos.
2. Engagement of your videos
While the overall number of views is surely an important factor in a high-ranking video, it is more important for your video to be interesting to those who choose to view it. How long do your videos keep your viewer’s attention? Generally speaking, videos that capture 40% of the viewer’s attention (i.e., over two minutes of a five minute video) will help your video rank higher. YouTube looks at two audience factors – absolute (what percentage of your video is watched) and relative (how does this compare to other videos of similar length?).
3. Social signals
As with traditional SEO, social media links appear to be an increasingly important factor in the overall strength of your content. Factors that indicate video social sharing include embeds, external links, and the strength of the sites the video is being shared on. Particularly strong social sharing sites include Digg, Facebook, Twitter, LinkedIn, and Google+ so be sure to prompt sharing to these and other sites when posting your video.
4. Comments, responses, and reactions
YouTube wants to gauge how much dialogue your video generates. The numbers of comments, likes, and responses are important factors in determining your video’s ranking. Note: video responses in particular are hugely important. After all, YouTube is a video sharing site. If your video is responsible for creating additional video content for YouTube, you’ve hit an SEO home run.
Likes and shares are also factors that determine level of interest in your video. YouTube gives significant weight to the number of shares.
YouTube has determined that engagement is a better measurement of quality and satisfaction than simple views. As Google has given greater importance to Quality Score, YouTube has given greater importance to engagement. In both, the common threads are quality and relevance. If you create quality and relevant content for your readers and viewers, you stand a much better chance of getting to the top of every search engine.
Congratulations – you won the business. You worked hard to earn your clients by conveying your expertise and proving to them that the work you do will help them solve their problems and deliver a positive return on investment. Now, how you manage the relationship will go a long way toward ensuring you retain your client long after the initial project is completed.
Regardless of whether you are working on an initial SEO audit, or a robust social media engagement campaign, you must manage client expectations and communicate effectively with your client. You have a responsibility to your client to develop a plan that ensures there are no surprises that will prevent you from retaining the client moving forward.
Some steps to follow:
1. Build a team. Your team of experts should all be accessible and available to answer any questions as you collaborate on solutions. Each team member’s role must be effectively communicated to the client so the client knows who to go to when questions arise. You must effectively demonstrate how each team member contributes to the overall goal of efficiently solving the client’s problems. These roles include, but are not limited to:
a. Account Manager
b. Technical SEO Analyst
c. Content Curator
d. Link Building/Relationship Manager
2. Define your process. Define your process and effectively communicate to the client that deviating from this process will hinder your chances for success. Your process, which includes your firm’s unique value proposition, is your differentiator, and is likely the reason why your firm was selected in the first place. This is an important step as it enables you to retain control over the engagement and the dialogue. As you establish the rules of engagement, remember, your number one objective is to solve a problem that the client could not solve on his own. This is your opportunity to reaffirm to the client that you are not only valuable, but invaluable.
3. Diagnose the problem. Many firms like to pitch solutions before they have accurately and effectively diagnosed a problem. It is up to you, as the expert, to evaluate and assess before you prescribe a solution. As part of this diagnosis, once again reaffirm your unique value proposition. Reaffirming helps those clients who may be suffering from “buyer’s remorse,” or who may otherwise have doubts about your ability to help. This reaffirmation will go a long way toward creating an ongoing partnership with the client, and will help you retain the client moving forward.
4. Propose a solution. After you have diagnosed your client’s issues, your proposed solution should include goals and KPIs that reasonably establish your client’s expectations. Make sure to educate your client on the KPIs so that there is 100% buy-in on the goals. Setting proper expectations is vital to having both short-and long-term client satisfaction.
5. Apply your solution. As you apply your solution, the tactical work necessary to reach your goals, you must not make excuses if roadblocks prevent you from following your process. If part of your proposed solution includes having them update blog content, the client must have the resources and wherewithal to make the necessary update. If they cannot, this should have been identified during the diagnosis and proposed solution phases. It is important that both agency and client collaborate effectively in order for your projects to be completed according to the expectations set forth earlier.
6. Measure and reassess regularly. An important step in the project management process is analyzing and reporting on results. When you measure, make sure to report on progress made on the KPIs toward goals agreed upon earlier in the process. Communication is key, regardless of the success of the engagement. An important factor to preserving the trust of the client is to proactively take corrective action in the event that progress hasn’t been made toward achieving your goals. If you have followed your process, agreed to earlier in your engagement, and if you set proper expectations based on your past experience, the client will not be surprised by slow, yet steady progress.
If you effectively manage the relationship from pitch to close, you’ll be retaining more and more clients. You’ll spend more time improving your clients’ business, and less time proving your worth during another pitch.
SEMPO’s State of Search Report has been an industry stalwart for eight years running providing valuable data and insights regarding search strategy and tactics. In order to gain as much participation as possible and thereby provide more actionable data, we are extending our 9th Annual Survey period through November 23.
For those who have not yet taken the survey, we’re excited to announce some new features/topics that have been added while we have retained some of the aspects that have provided unique perspective over the years. Here’s a quick rundown of what we’ve kept and what’s new:
- We’ve kept the core strategic questions around channel specific budget increases/decreases, objectives, and metrics so we can compare/contrast with the results from previous studies. That’s one of the advantages of having established benchmarks over the years.
- We’ve also kept the key survey structure that has similar but separate tracks of questions for advertisers and for agencies. This is a unique feature of the SEMPO Survey that has consistently generated interesting take-aways and discussion when we analyze and report the survey results.
- We added Social Media to the survey several years ago as it was becoming clear that social activity was being incorporated into search engine ranking algorithms. This year we’ve added Mobile and Email Marketing questions to further gauge the expanding integration and evolving role of search with other digital content marketing channels.
- And we’ve added questions around some of the major developments recently announced (Hummingbird, keywords not provided, etc.) along with our now standard questions to help identify and prioritize other emerging trends and industry challenges.
The 2013 State of Search survey is open to SEMPO members and non-SEMPO members alike and it’s time for your voices to be heard. Please take the 10 minutes or so to participate by clicking here. By participating in the survey, you will receive a complimentary copy of the report as well as a chance to win an iPad 3. Please also help us spread the word. The more participation we get, the better the data is for all of us.
A key finding from SEMPO’s 2012 State of Search Report was that advertisers and agencies had a very different perspective on the need to integrate search and social media activities.
With hundreds of thousands of new accounts created each day, Twitter is arguably one of the most powerful tools for increasing brand awareness. As the second-largest social network, it reaches millions of people every second with 400 million tweets a day.
To increase brand awareness and promote your brand on this platform, consider these simple approaches to monitoring and managing your account:`
1. Stay In Touch With Hashtags
Have you ever considered the impact of a hashtag on your company’s brand buzz? In a survey conducted by RadiumOne, an online advertising firm, 71% of the respondents used hashtags on a regular basis and 34% of them used hashtags to search for and follow brands they are interested in. With the help of hashtags, Twitter allows companies to easily track how active they are in the Twitter community. Be sure to consistently monitor Twitter for mentions of your company. Hashtags have become so popular that American Express announced a new program, Amex Sync, that will allow cardholders make purchased by using hashstags.
2. Reach Out And Engage – Being mentioned is one thing, but responding to those who are talking about your brand is another. Research indicates 56% of customer tweets to companies are being ignored. This is a missed opportunity. It is important to ask questions, answers questions, and acknowledge tweets regarding your company. By building a presence on Twitter, your customers will make a personal connection with your brand; this will lend to your business’s credibility and trustworthiness. One company that has mastered customer service on Twitter is JetBlue. We all know how frustrating flight delays and cancellations can be, so JetBlue acknowledged this and made it a priority not only engage with happy customers but to respond to and help frustrated customers as quickly as possible.
3. Quality Over Quantity – Use Twitter to give instant updates and insights regarding your brand, but be sure not to flood your followers with the same tedious messages. It is important to mix things up. There must be a real etiquette to your approach. Take a look at Nike for example. Nike engages its followers with interesting tweets and retweets. It pulls in its audience with messages directly related to its product but also counter-balances with tweets unrelated with its sales efforts. Nike also does a great job of showcasing future products and retweets their followers’ opinions on them. The company also has individual accounts for its subsidiary brands, including golf, running, football, and basketball. This is used to keep the messages tailored to each individual audience.
4. Incorporate Twitter into Promotions – Just like with Facebook, you can run promotions on Twitter and increase awareness using Promoted Trends and Promoted Tweets. For example, Ciroc Ultra-Premium wanted to engaged Twitter users over the age of 21 to build its brand awareness and did so by creating a New Year’s Eve campaign that combined Twitter’s age screening technology with a Promoted Trend and Promoted Tweets to connect with their targeted audience. By incorporating the hashtag #CirocTheNewYear, the company launched the campaign that had the highest Promoted Trend engagement in 2012 by an alcohol brand and a 369% increase in positive brand mentions. Promoted Trends and Tweets are a great way to increase brand awareness because they will be placed where your audience can easily see them and can be targeted by keywords, interest, gender, and location.
5. Promote a Twitter Chat – Twitter chats are an excellent way to establish your company as an influencer on a given industry. They allow you to establish rapport with your audience and offer you valuable opinions. TipIt, an app that organizes your travel plans in one place, holds a monthly chat on Twitter where it discusses new topics and gives away prizes to participants. Creating a Twitter chat isn’t hard. You simply decide on a relevant Twitter hashtag and tweet about the topic at a set time and date. The key is to encourage other people to join the conversation and allow them to offer input. Post the Twitter chat on each of your social platforms and your website. You can find daily Twitter chats on different topics by visiting TweetReports.com.
What other ways have you used Twitter to promote your client or business? Tell us about your successes in the comments below.