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Tuesday

25

Jan 2011

Back in mid 2010, Google made an announcement regarding AdWords that affected how companies work with agencies. It was a set of regulations regarding transparency and protecting clients that goes into effect this February and we thought it would be a good time to discuss it so everyone can be ready for over the next week. This post is written by Rachit Dayal, our Principal Search Marketing Consultant who has been running Google AdWords campaigns since 2004.

Welcome to the Most “Official” AdWords Scam in Singapore

For years, unscrupulous agencies have been scamming Singapore businesses with a simple pricing model:

  1. Charge the client $ X per click
  2. Pay Google half or one-third of that amount with a 50-70% margin
  3. Keep the details from the client, and through the mask of darkness – keep ripping them off.

We’ve been in the market in Singapore for more than half a decade now, and this is a pretty common practice among some of the larger, big-named SEM agencies. And because most clients would be pretty outraged if they found out they’re paying the agency 2X the actual click prices, the major agencies have been happy to keep the issues of CPC transparency hush-hush all this time.

This issue must have been coming up in many different territories because last July, Google made transparency one of the requirements for agencies. It announced new regulations for agencies & resellers that starting Feb 2010, every agency must report to the client, exactly how much of their spend was spent in AdWords. Here’s more from the official Google article on agency transparency:

What type of information is Google requiring third parties to share?

For those third parties that don’t provide any reporting today, they should, at a minimum, provide advertisers with monthly data on AdWords costs, clicks, and impressions at the account level. For example, let’s say ABC Agency is managing AdWords campaigns for their client, Joe’s Plumbing. In July, the AdWords account for Joe’s Plumbing accrues 1,400 clicks on 12,000 impressions for an AdWords cost of $700 (the exact amount charged by AdWords). ABC Agency will be required to provide a report to Joe’s Plumbing that shows AdWords cost and performance at the account level:

Joe’s Plumbing — AdWords report for July 2010

  • Clicks: 1,400
  • Impressions: 12,000
  • Cost: $700

So, if an agency collects $100k from a client, and only spends $50k of that on AdWords expenses –  now they’re required to inform the client that $50k was spend on AdWords and list out the impressions and clicks attributed to those expenses.

How to ensure your Agency is meeting the new Transparency Requirements

As February rolls around, there will be many agencies and clients who have simply forgotten to comply with the new regulations – if you’re an advertiser (client), here is what you need to stay on top of these latest changes:

  1. Ask your account manager about these latest changes.
    If they’re unaware, point them to this article and ask them to tell you how they are going to comply. If they refuse, consider reporting them to Google – these guidelines are meant to protect clients, and you should not work with agencies who do not
  2. Ask for a monthly/weekly report of how much was spent on AdWords
    Most agencies would already provide some sort of a monthly report of cost, bid prices, impressions and clicks. Unfortunately these are the bid prices and costs the agencies charges you, and not the actual amount AdWords spends. If the agency refuses to share these details, it’s time for a switch.
  3. Check the percentage of AdWords spend and make sure its reasonable
    Depending on the size of the account, good agencies earmark 15-35% of your spend as management fee as margins. But bad resellers and agencies would charge considerably more (anything above 35% is daylight robbery). Ensure 70-85% of your actual spend is going to AdWords.
  4. Check the rationale for extra fees
    Many agencies provide extra services along with SEM management (bid optimization, daily monitoring, landing pages etc). Some will include them with the management fee (we do, because we find it essential for getting an ROI). Others will charge for it – if your agency does, ask them for a cost breakdown and have those fees justified – rather than drive up your management fee from 25% to 50%.
  5. Educate Yourself
    Read Google’s own guide on working with Third Party Partners. Check the AdWords Youtube channel, the AdWords blog and the JAPAC Conversion Room Blog for the latest news on Search Advertising. An educated manager on the client side can drive the agency & campaigns in the right direction much more efficiently.

And some good news – Happy Marketer is now an AdWords Certified Partner

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Before we wrap up this opinion piece, we received some good news in our inbox from Google over the weekend – we received the Google AdWords Certified Partner certification (click to verify). This is the new company-level certification and was only launched late last year.  According to the official Google help center article on the topic, here’s the definition of Partners.

Who are Google AdWords Certified Partners?

Google AdWords Certified Partners are online marketing professionals, agencies, and other individuals – such as search engine marketers (SEMs), search engine optimizers (SEOs), and marketing consultants – who currently manage or want to manage AdWords accounts. They must sign up for the program successfully and have an active AdWords account. Partners go to extra lengths to attain this status, including passing our exams, which demonstrates their in-depth knowledge of AdWords.

While this doesn’t represent an official change in our management skills (we’ve been running campaigns since 2004) and have Singapore’s first certified AdWords consultant on our team working on campaigns – it’s nice be recognized for our AdWords skills. If you have any questions about this certification, our AdWords services or best practices in Search Advertising – feel free to contact us.

What do you think about these changes? Are you an agency and meeting these guidelines? Are you an advertiser and want to report an uncooperative agency? Sound off in the comments below!

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