Search Marketing Agency Pricing Models

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We started a thread over at Search Engine Land about search marketing agency pricing structures and rates:

Pricing structures and rates aren’t secret in established service industries. Real estate agents get 3% to 6% of the house’s price; recruiters get 1/3 of total first year comp; trial lawyers take 33% of the settlement; list brokers charge 20%. While specifics vary, each industry has conventional pricing arrangements.

Not so in paid search management. Not yet. Not only are rates kept under wraps, as an industry we’ve not even yet converged on the most appropriate structure for those fees.

You might ask, “Why does the pricing structure matter? If client and agency deem the fee fair for work performed, why does it matter how that fee is computed?” Incentives drive behavior, and fee structures (not just amounts) influence how a SEM agency serves its clients.

We’d suggest a sensible way for a paid search marketing agency to charge for their services is “capped percent of ad spend…

More discussion of search marketing agency pricing structures and rate at SEL.

What do retailers think about this? What do other agencies think?

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