Google’s Best Practise Funding no more - what does this mean to UK PPC

September 21st, 2007

On the 20th Sept. 2007, Google announced that they were ceasing Best Practise Funding (BPF) as of 2009, although some changes will be introduced in 2008. To a number of agencies in the UK such as Bigmouthmedia and Search Latitude this is big news, particurly as this will affect the margins the agencies can make on Paid Search campaigns (However I will add most of the afore mentioned agencies have already planned for the removal of BPF).

So why was Best Practise Funding introduced?

• Google wanted to encourage the use of Paid Search, and wanted large agencies to encourage clients to leverage extra budget towards PPC.
• Google needed a mechanism by which to reward such agencies and as such the Best Practise Funding (or BPF) was just one such way to do this

As Andrew Girdwood stated in his post on the E-Consultancy blog post, I would suggest that Google has achieved both its goals in terms of the above.

What changes are to be introduced in 2008

The Best Practise Funding is to be ceased as of 2009, however as of January 2008, the following changes will be introduced.

• No Growth Kicker from January 2008
• Existing tiers for rebates lowered from €4M upwards, making higher rebates achievable quicker. This will equate to a small increase in the total rebate agencies receive
• Removal of incentives for use of new formats such as video/mobile
• BPF targeting handled automatically so separate campaigns will no longer be required for non-BPF countries on multi-national projects and campaigns

So what does this mean?

To the majority of agencies - not very much I would suggest. However to the larger agencies where agency spend is over €250,000 per quarter this could have a significant effect. Agencies where spend falls under this threshold could find their margins thus significantly affected if they have either not planned for such an occurance, or secondly are very reliant on such ‘commisions’.

I personally would suggest this is more likely to affect the PPC reliant agencies rather than the more ‘integrated search agencies’ (a fairly obvious assumption I think most would agree), however I would also suggest this may also provide extra opportunities for smaller agencies outside of the so-called Top 5 (Latitude, Search Works, Publicis, WPP and Aegis) to compete against larger organisations, as everyone will be on a far more level playing field, where larger agencies where BPF was applicable could discount fees with the BPF in mind. I guess only time will tell.

We would also suggest this should result in greater professionalism within the paid search service sector. Many of the larger agencies have already suggested those offering high value services and greater professionalism are likely to benefit from this.

Only time will tell what is going to happen, but one thing is for sure - its going to be an interesting time for Search Marketing and Paid Search Marketing in particular

Entry Filed under: PPC