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5 Reasons Performance Based SEO (CPA SEO) May Not Be Right for You!

succes-upPaying your SEO based on some sort of performance may sound like a dream scenario to you. But are you aware of the negative sides of CPA SEO? If not then read this post!

I have done many performance based SEO deals over the years so it’s a field that I have great experience in. All in all I like CPA-deals – I don’t mind being paid on the value of what I do rather than the time it takes to do it. In fact, I love it! And most often the CPA-deals I have been doing have been the most successful and long lasting client relationships I have had.

However, I do get quite a lot of requests for CPA SEO from people that have clearly not thought about the consequences and possible negative sides of a CPA SEO deal and are not ready to accept them.

So lets take a look at some of the main issues that I have run into dealing with performance based SEO…

  1. CPA SEO will cost you more!
    One of the most common misconceptions about performance based SEO is that it is a cheaper way to get great SEO. Its not! In fact, most often it ends up costing you more for the same work and results compared to traditional payment plans.The reason for this is very simple: With a performance based SEO deal your SEO supplier runs a risk. It is impossible for even the best SEOs to always succeed. Sometimes things just don’t work out the way you expected. The good jobs have to pay for the not so good jobs. So if everything goes well with your CPA SEO project – which it often do if your SEO is really good, then it will end up costing you more than it would if you had just paid the same SEO his or hers regular fees.

    On top of this you will have to accept a bonus for taking a risk. If it just evens out there is no point for the SEO in taking the risk.

    So you should not chose performance based SEO because you want to save money but because you want to reduce risks – the risks of paying for something that doesn’t turn out to be profitable.
     

  2. You get less freedom with your site on a CPA SEO deal!
    If I have to take the responsibility of creating and executing a SEO strategy on your website that really works – and only get paid if I perform well, then I want to be sure I can do what I need to do and that you, your team or other subcontractors don’t mess it up.I need a certain degree of control in a CPA SEO deal. First of all you have to let me do what needs to be done – and get the necessary help from your development team. And when my fixes and optimization is done I need you to not mess with it or change things without my consent.

    Because if I can’t do what I know needs to be done and I can’t be certain you, your team or your subcontractors will not mess it up (by accident or because you did not know it was of any importance) then I can’t perform and then I won’t get paid.
     

  3. You have to commit for a long term deal!
    CPA SEO is not a short term deal. It takes time to get the basics done and time for the engines to catch up. Over time a well executed SEO strategy will just get better and better.Typically you will have to commit yourself for at least 6-12 month to give the SEO enough time to benefit from the results of the executed SEO strategy.
     
  4. Your SEO-consultant may end up earning more than you!
    If you want to per on performance basis and the supplier you choose do a really good job (and maybe have a bit of luck on top of it) he or she may end up with a huge “salary” – sometimes even bigger than what you pay yourself or your top managers.I have had this experience myself a few times. On some of the CPA-deals I have made I have performed really well. The result have been that I ended up with a very good earning – sometimes £10-20k a month with only a few hours of work every month. I can understand how that might seem “unfair” to some of your hard working employees – but then you should just not enter into performance based deals!
     
  5. You most often have to pay an exit fee!
    The value that a good SEO puts into a website will continue to bring in money a long time after the SEO has stopped working on the site. The technical improvements, the texts and the links will not just go away. And since you only pay for the value of the work the SEO do for you – and not the time it takes to create that value it is only fair that you pay an exit price when you want to get out of the deal.There are many ways to calculate such an exit price but typically you will have to pay a multiplication of the monthly value created – often from 6 – 12. So if the value created by your SEO in a CPA deal is $25,000 per month (according to the calculation methods you have agreed on) you will have to pay 6 or 12 times $25,000 if you choose to cancel the deal.

 

All the above is not said to scare you off CPA-deals. Not at all! I just want you to be realistic about the consequences of making such deals. If you are not ready to accept them don’t do CPA.



Skrevet af:

Mikkel deMib Svendsen er grundlægger af deMib.com og fungerer i det daglige som kreativ direktør.

Kommentarer (22)

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  1. Sound post Mikkel, have also been doing performance based SEO for a few years in the UK and I think it takes about four time as long (20 hours) to put together agree and sign the deal and the contract.

    Reaching agreement – and making life easier, I see that most areas where SEO PRPs fail is humans! Not being able to disambiguate multiple parties or existing work, and then dealing with credit rating, financial, market, seasonal issues, and also an over complicated model, time or contract term commitment issues, is not easy to get this nailed down!

    Fundamentally its often a relationship sell – and if ‘the team’ can agree the true KPIs and you can approximately value them and trust in them then you can have a direction to go in. Motivationally for the larger ‘team’ performance based SEO is a far more stable and secure relationship. I encourage clients to also motivate their staff which help drive everything forward and makes you popular with them!

    Like the idea of an exit fee, better than having a 6 month notice period where things go stale potentially. Cheers

  2. Mikkel deMib Svendsen siger:

    > Like the idea of an exit fee

    Yes, that have worked out well for me – and my clients. I don’t like long notice periods in which noone is really motivated anyway.

  3. Kevin Spence siger:

    Nice post, Mikkel. One of the hardest things about this profession is getting people to trust us enough to pay a nice chunk of cash when the real results won’t happen for 6-12 months — people are used to paying for services rendered.

    So I understand why some clients want to pay based on performance, but it sure does make things more complicated. Defining the acceptable performance benchmarks, for instance, can be difficult, and as you said, agreeing on the contract can be really tough.

    • Mikkel deMib Svendsen siger:

      > it sure does make things more complicated

      Absolutely – at least to begin with. Later in the relationship I actually find that it can be easier than a regular consulting job.

      Also, you – as an SEO, got to have both the money and the balls to make such deals. As you say – sometimes it can take 6-12 month before you start getting money. In all that time you have to have some other income – or good savings.

      To most SEOs a combination of performance based jobs and regular hourly paid jobs are probably best – but only if you can accept to constantly invest part of you profits on consulting in CPA work.

      In my experience it does pay out well if you are very selective about the jobs you take – and most importantly, say no to the “wrong” clients and jobs – the ones that don’t accept one or more of the consequences outlined in my post.

  4. Also there is the issue of link budgets. If the client wants paid links then most SEO’s will want them to cover those costs up front.

  5. You’re making £10-20k a month for 1 site? Wow! That’s a lotta money in my currency. I gotta migrate to Britain. UK here I come. I love UK. UK citizens who hate UK and wanted to destroy UK through acts of terrorism gotta trade place with me. I’ll trade my citizenship with you. :D

    • Mikkel deMib Svendsen siger:

      > You’re making £10-20k a month for 1 site? Wow!
      > I love UK.

      I am actually living in Denmark. My friends in UK can make far more :)

      Honestly, its absolutely not all sites that can pay this well and to reach that level you need to invest A LOT in the project.

  6. gtech siger:

    Just curious – CPA indicates to me that there has to be some measurable events / purchases / transactions for the website owner. But I can imagine this would be tough to measure in various scenarios such as retail shops with walk-in traffic. Any suggestions on what to measure, or is there another methodology in use with CPA SEO?

    Thanks!
    Steve

    • Mikkel deMib Svendsen siger:

      Good question! :)

      “CPA” is not really a perfect term for the many variations of performance based SEO that are being used. Thats why I also use the term “performance based SEO”.

      Sometimes performance based SEO is valued on: Rankings (allthough I don’t personally think thats a good model), trafic – or increaed trafic from search and sometimes on the return on the trafic: Leads, subscriptions, downloads, sales etc. Its the last group that you can really call CPA SEO.

      The difficult part about performance based SEO is to find the right ways to calculate the performance based fees – that are good and fair for both parties.

  7. Marc siger:

    RATS! i have been pondering this model for a while and was hoping it would allow me to escape the corporate bureaucracy, thanks for the heads up Mikkel

  8. Gareth James siger:

    “The technical improvements, the texts and the links will not just go away”

    Shouldn’t you ensure that the high quality links can be pulled if needs be?

    • Mikkel deMib Svendsen siger:

      No, I would personally never do that. That could be directly damaging for clients and thats not what I am hired for – no matter how I am being paid.

      If prospects knew I would end up destroying their SEO if they ever cancel the contract I don’t think anyone would sign it in the first place :)

  9. [...] 5 Gründe wieso performance orientiertes SEO nix für Dich sein könnte – So true! [...]

  10. Gareth James siger:

    “If prospects knew I would end up destroying their SEO if they ever cancel the contract I don’t think anyone would sign it in the first place”

    True but there is always an chance of not getting paid…would you remove links then?

    • Mikkel deMib Svendsen siger:

      No, I would just send the claim to my lawyer – like any other client that don’t pay their bills.

      There is no difference between a CPA and any other deal when it comes to that

  11. Angela Hill siger:

    Nice post. Only issue is that some people may not know what the term CPA stands for, which is a much larger issue of terminology within the industry. I don’t think we do our clients any favors when we create so much mystery and confusion in the beginning. It just leads to mismanaged client expectations as you go through the process.

  12. Miguel siger:

    Great Post. I especially like you point in #1. That you should only use CPA SEO to reduce your risk, not your cost. Too many times clients fail to get this simple fact.

    Great writeup,

    Miguel

  13. SEO siger:

    1. How do you sue international clients? The fees for legal representation would likely wipe out any judgement if you could obtain one.

    2. Can you name another form of advertising other than Paid SEM that allows clients to pay upon performance?

    Television – No

    Radio – No

    Outdoors – No

    Magazines – No

    Newspapers – No

    Guerilla Marketing – No

    The only way I do pay for performance is where I own the site and the client earns all revenues. Once payment is missed after 30 days the site earnings revert to my bank account.

    • Mikkel deMib Svendsen siger:

      > How do you sue international clients?

      I have never had to. I am very selective about the clients I take on :)

      But in any case I don’t think your question has anything to do specifically with CPA/Performance based SEO. You can have clients that don’t pay no matter what payment model you use. And as a business owner you should off course always do whatever you find reasonable to protect yourself. Some degree of risk will always be left – that goes for any kind of business really.

      There are a lot of things that search marketing does much better than the any old traditional form of advertising. But I don’t think that should stop us from becomming even better.

      Besides, you CAN in fact some times negotiate CPA deals with some of the old medias but I agree its not very comon.

      > The only way I do pay for performance

      All I can say is that I have had very good experience working with performance based SEO directly on the clients sites – both from the point of view that its definately been my longest contracts and from a financial point of view (I made more money on them than any consulting SEO deals). But I have also been extremely selective in the projects I have sign on … :)

  14. Jacob Stoops siger:

    I think you’re dead on about point #1. It can cost much more than just paying a monthly rate for hours worked. I know first hand from working with a large company in the gardening industry that this is true. We compared our performance vs the data they had from the previous year and got paid based on improvement. IMO cost them much more that they would have paid otherwise.

  15. Yeah right, if I’m the client, I would certainly pay for what I think has a good performance. I won’t risk my money on something I’m not guaranteed of. And on the side of the business owners, you also wouldn’t want to risk on clients which you think you can’t trust.

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