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SearchTHIS: The Search Agency Burden

SearchTHIS: The Search Agency Burden Kevin Ryan

Google dropped its agency commission plan recently. Perhaps a bit more appropriate way to describe the change is something of a reformation. The announcement came during ad:tech’s debut in London and, dare I say, it caused quite a stir in the search community.

Are you surprised? Many search marketers were unaware that an agency compensation model even existed. If you haven’t been practicing search beyond American borders you would have no reason to believe that such compensation models exist. In short, it is commonly accepted that agencies would receive a five to 15 percent “commission” on search advertising dollars.

The news of Google’s intent to create a more effective way to compensate third parties had more than one search marketer’s shorts in a bunch and the emails I received complaining about the compensation model shift prompted me to ask a series of questions. 

In the world of serving the client, which compensation model for third parties is best? What might happen if we continued down the path of a commission structure? Is any of this whining really necessary?

Google love

While admiration for the search giant would seem to be in short supply these days, the removal of flat compensation would seem to be a smart move on many levels. Removing compensation plans for big spenders will enable smaller players to compete. Instead of a blind focus on increasing revenue, third parties will now have a focus executing best practices in search. Of course, said best practices are determined by Google, which raises another interesting question.

Who should be determining best practices?

According to Google’s press release, dated September 28, 2005, the new European Third Party Program will offer training, tools and support to third parties. While the “best practice funding” model allows for greater flexibility and advertiser diversity, it is still left to the search provider to control the interpretation of the ideal course of action in program management for third parties.

Compensation models

For many purveyors of search marketing the concept of compensation is restricted to a surcharge on media placement, time and materials (in the more traditional model) or performance-based revenue sharing. Assuming all return or desired action requirements are met, budgets increase and search marketing continues on its growth path. Everyone is happy.

Oversimplified, a surcharge on paid search spending allows third parties to cover operating and service costs and usually falls in the five to 18 percent range, depending on the scope of work and spending threshold. Some would argue this model would present a conflict of interest. It is in the best interest of the third party to increase budgets and therefore compensation. Many search marketing third parties are moving to flat fee structures or they may place a ceiling on compensation.

The affiliate world made revenue sharing popular, and the dangers of revenue sharing are painfully obvious. Typically, a third party will accept as compensation a percentage of sales generated by search initiatives. It is generally understood that search is driven by other forms of awareness-driven marketing so search may receive undue credit for generating sales.

Expanding on this problem is the inherent success in measuring search-driven revenue. In this scenario, if a search initiative generates 10 million dollars in revenue per month and the third party receives a 10 percent revenue share, the “management fee” may equal many times what the service is actually worth.

The least biased form of search marketing compensation might be the tried and true variant of simply compensating the third party for the amount of time and resources dedicated to the initiative. However, establishing and managing search initiatives may require resources at multiple levels. Additionally, the time commitments vary tremendously in search management and few search firms have experience with this type of compensation model.

With all of the complications that exist with pricing models a generic “agency discount” sounds pretty harmless. Or does it?

In the beginning…

God created the yellow pages. Or maybe it was that guy from "Saturday Night Live." Merchants everywhere clamored to buy an ad in these wonderful advertising books with telephone numbers. The dangers of flat agency compensation might best be illustrated in an abridged history of the yellow pages third-party compensation model.

Shortly after phone book ads were created, large advertisers sought to have a presence for their national brands. Out of this need, the first national yellow pages ad, the trademark listing, was born. A trademark ad was little more than a logo with a small address listing below, placed alphabetically. It is still found in telephone directories today.

Since many yellow pages publishers existed and phone books were published at varying times throughout the year, these large accounts were designated as “national,” and an industry segment of third parties sprouted up to serve only national yellow pages advertisers. These third parties were compensated with a sales commission of around 30 percent.

Later, one or two third parties got the bright idea of operating on much smaller margins and began a wholesale discounting initiative. Publishers eventually figured since some agencies were operating on much smaller margins the rest should as well. The practice of "discounting" publisher rates is now commonplace and third-party compensation continues a steady decline.

Philosophical differences

Search marketing is undergoing a transition right before our eyes. In a lot of ways the change resembles the evolution of compensation from similar industries that have developed and matured in the last few decades. Today, many negotiations for a third-party relationship in the national yellow pages sales channel begin with questions about what types of discounts are offered. Services offered are a distant second to pricing and many publishers enforce a “sales quota” for third parties.

Third-party control of the advertiser relationship has been compromised. Advertising services have been commoditized and many of these third-party agencies have been reduced to little more than glorified sales agents. The publisher sales force for local ads and national third parties are constantly at odds with one another.

Perhaps severe philosophical differences of opinions might be the impetus for dynamic, and possibility dramatic, change in search compensation. Finding the right model is still left to individual negotiations and while many of these models are flawed, leaving compensation in the hands of providers -- in this case search engines -- empowers them to control the industry in ways that will lead the very idea of a neutral third party down the wrong path.

iMedia Search Editor Kevin Ryan’s current and former client roster reads like a “who’s who” in big brands; Rolex Watch, USA, State Farm Insurance, Farmers Insurance, Minolta Corporation, Samsung Electronics America, Toyota Motor Sales, USA, Panasonic Services, and the Hilton Hotels brands, to name a few. Ryan believes in sound guidance, creative thought, accountable actions and collaborative execution as applied to search, or any form of marketing. His principled approach and staunch commitment to the industry have made him one of the most sought after personalities in online marketing. Ryan volunteers his time with the Interactive Advertising Bureau, Search Engine Marketing Professional Organization, and several regional non-profit organizations.

Mr. Ryan is managing partner at Kinetic Results.

The first face should be a woman's face

Both men and women, across all cultures and ethnic groups, respond positively when the first content based image is a woman's face. Content based meaning "the changing portion" -- not the banner, the menu, the ads, or the background, but the area where you place your message.

This was surprising because NextStage performed this study with some strongly patriarchal culture groups and common wisdom would have indicated that a male face would create greater positive affect in such cultures. Never-the-less, a woman's face presented first among many causes the strongest positive response and that positive response haloes the rest of the content. The major caveat here is that the face must be from the audience's peer group. This reinforces studies about the best corporate spokespeople and presenters being mirrors of the audience the company wants to penetrate.

Position is everything in the visual field

You can place a given content element in one position and people will think it's wonderful. Move the same content element to some another position and people will think it's terrible.

This is especially true of facial images. Notice the image above again. The woman's face is towards the camera from the left of the screen. This would normally send a non-conscious signal to the audience that the woman is analyzing or evaluating them, basically scrutinizing them. More often than not, facial images on the left of the screen cause subtle anxiety responses in people.

This was not the case here due to the actual testimonial, "Loved your presentation!" The short, direct statement at the visual level of the woman's mouth and using an emotion verb signaled that this woman could be trusted, could be believed and was "right." When study participants were asked, "Is this woman telling the truth", over 90 percent agreed unconditionally. Participants in the study demonstrated subtle, non-conscious anxiety responses to the image, but immediately relaxed (as gauged by breathing, keyboard/screen attack rate and pressure, flexion in the large muscle groups, etc.) upon reading the comment.

This tension/relaxation response almost always causes favorable reactions to information.

Enthusiasm and emotion beat a straight flush

The top image shows a male with a joyful expression holding a sparkler, and the image below it shows a smiling woman with her head canted towards both the audience and the content. Both images signal a blend of enthusiasm and emotion, and both focused participant attention strongly.

More to the point of marketing, the text next to each image was evaluated for a longer time period -- meaning the participants were self-branding with the image and its matching content -- than with other image-text combinations used in the study.

NextStage often tell clients that emotion is energy in motion. All marketing and all consumer decision processes, in their base form, are emotional appeals and decisions. Logic and higher cognitive resources may be involved and in the end, if the higher and lower brains (cognition and emotion) are in conflict, the sale will go sour or won't happen at all. The consumer will suffer buyer's regret and remorse, they will become a customer service nightmare, and it'll go downhill from there.

Show your audience an enthused peer group member who's showing welcoming emotion about your product or offering and you've branded your audience that product or offering is good, necessary, and will make them happy.

The danger here is that the use of enthusiasm and emotion is extremely product and audience specific. A teenager's emotional display regarding a mobile phone won't move a boomer to purchase, and a boomer's emotional display at a sunset won't move a teenager to take a vacation. Too much enthusiasm or emotion caused negative responses across all demographics studied. Today's audiences more often equate high levels of enthusiasm and emotion with a lack of education, experience, or as attention seeking behavior. And each demographic has strict morals regarding what attention seeking behavior is acceptable and what isn't.

Known authorities should be shown being authoritative

Suppose you're going to use a testimonial from someone whom your audience recognizes as a known authority. Good for you!

But now suppose you have them doing something that your audience doesn't recognize them doing. For example, you sell skis, your recognized authority says your skis are the bees knees, but your authority image is him or her reading a book by a fireplace.

Two things happen that hurt you:

  • Your audience has to decide if the image is a gag and you never, ever, ever want your audience to make a decision when you haven't tilted the scales in your favor. 

  • If your audience can't decide, then your recognized authority's reputation goes down a notch in the community. Bad for you, bad for your authority, but great for your competition.

Have your recognized authority doing something that demonstrates their authority. The image below shows a known authority lecturing/teaching. The text is lengthy, something expected from a teacher/lecturer.

Very few participants read the complete text associated with this image, however over 80 percent of them evaluated what they read as true. Note that some positional elements come into play; the image is on the left of the screen and that adds to the "authority" aspect.

Engagement with others is a good thing

The above image is a psychosocial masterpiece in itself for interaction-causing design in and of itself. The image is on the right of the visual field, signaling the brain to use social intelligence to understand its content. The image itself is of a female looking both towards the reader and the text, so whatever is in the text is being said to the reader.

But also at the bottom of the image is someone else's arm, so the woman is interacting with someone who's just out of the frame and who happens to be in the reader's psychospatial location (have you ever seen an image and felt you were part of it, as if you were in the picture? That's psychospatial location kicking in).

This overall non-conscious impact is brilliant. The woman is looking towards the reader and the text, and she's also interacting with someone in the image. Readers will non-consciously identify themselves with the person just out of the frame in the image, hence the woman is talking to the reader person-to-person, and the text is being said directly to them because they identified themselves with the individual just out of the frame.

Leaning into the text indicates a willingness to help, serve, and assist

The image below is also on the right, so again psychosocial aspects come into play. This non-conscious signal for social engagement is heightened by the subject's slight lean towards both the text and the visitor. Note that it is a slight lean, not so much of a lean as to be threatening, more like the subject's ready to lend a hand.

This non-conscious suggestion of help is reinforced by the subject in the picture having a genuine smile. Our brains are masters at recognizing subtleties in facial feature placement and can determine a fake or forced smile from a genuine smile faster than it takes to make one. Non-consciously, the fake or forced smile signals danger, threat, and trouble, that the smiler is not to be trusted. Fake or forced smiling images in marketing are a big reason that well designed content produces minimal results.

However, a genuine smile, especially when the smiler is slightly leaning towards the viewer, non-consciously signals that the smiler is saying something like "Wow, that's neat! Can I play, too?" and is possibly a friend that's genuinely interested in what's going on with the reader and their actions.

Candid wins over posed, professional, and glamour shots

The last item is specific to images used for testimonial purposes an is also audience and product specific; candid, personal images are more believable than posed, professional, and/or glamour shots. For most audiences, the latter are quickly recognized as marketing, therefore any text attributed to the person in the image is also marketing. Another risk is that the posed, professional, and/or glamour shot is so striking that the viewer's attention is locked on the image and the accompanying text is ignored or lost (see above image).

However, a personal and/or candid shot (see image below) allows the viewer's brain mirror cells to engage rapidly, and trust is established between the viewer and the person in the image, meaning whatever they're saying must be true because mirrors don't lie.


Using facial images to influence visitors is incredibly easy to do so long as you remember three simple rules:

  • The faces must be of your target audience

  • Place the image according to how you want any accompanying text evaluated

  • People assign greater validity and truth to what is recognized than what is unrecognized (mirror-selves).

Joseph Carrabis is founder and chief research officer at NextStage Evolution.

On Twitter? Follow iMedia Connection at @iMediaTweet.

"Emotional man in a business suit" image via Shutterstock.

Kevin Ryan founded the strategic consulting firm Motivity Marketing in April 2007. Ryan is known throughout the world as an interactive marketing thought leader, particularly in the search marketing arena. Today's Motivity is a group of...

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