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Mark Jackson at Search Engine Watch published a post yesterday about an interesting concept: performance-based compensation for SEO.

In it, Jackson describes a panel discussion at the Search Engine Strategies conference that took place in Silicon Valley last week. The panel, "Performance Pricing Models: What Every CMO Must Know", broached the subject of performance-based pay for SEOs.

According to Jackson, "the panelists seemed to agree" that "SEO has so many variables to consider that [such a model] can be incredibly difficult to pull together". He did note, however, that many marketers in the audience were interested in the possibility, for obvious reasons.

Jackson goes through all the things he thinks would need to be in place for a performance-based compensation model to work. These include analytics tools that are up to the task, the right metrics on which success is measured, an understanding of responsibilities and capabilities, and perhaps most importantly, the requisite level of "participation, collaboration, and cooperation".

Generally, most SEOs (and full-fledged agencies offering SEO services) won't have clients with all this in place. The amount of risk that these providers would incur by accepting performance-based compensation is therefore too great to make sense in most cases, especially in light of the fact that a lot of the success and risk factors can't be controlled. Because of this, I don't expect we'll ever see performance-based pay become a common practice in the SEO market, although there's plenty of room for greater use of incentives.

That said, I think the discussion of performance-based pay is a worthwhile one. There is a lot of opportunity out there for skilled SEOs and the most entrepreneurial of the bunch could probably swing some potentially lucrative partnership, revenue sharing and/or equity deals.

Already, I know of deals made between domainers and developers, for instance, in which the developers are given the opportunity to develop valuable generic domains in exchange for a slice of the revenue. In many cases, it looks like a win-win: the domainer may not have the skills or time to develop the domain, the developer gets to build a potentially lucrative online property using a domain that someone would probably kill for. Given that PPC revenue has declined for many domainers, developers who know lead generation/CPA inside and out may be especially well-positioned in this market.

So back to SEO. While we may not see performance-based pay take hold in the SEO market, given how good SEO can take an online business from nothing to something, it certainly wouldn't surprise me to eventually see a growing number of the most skilled (and financially-secure) SEOs employ more entrepreneurial business models.

Patricio Robles

Published 19 August, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (2)

Jeff McCarthy

Jeff McCarthy, Senior Lecturer at Manchester Metropolitan University Business School

Certainly believe it's an interesting discussion to be had. As a starting point, we would need to be careful about how that performance is achieved & measured. For example ranking on relevant & targeted terms achieved by genuine SEO rather than indiscriminate automation & inappropriate use of microsites etc. Seem to be seeing a bit of this lately in approaches from less reputable SEM companies.

about 7 years ago

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Philippe Morin, Head of team at Aedgency

I did it in the past (from a merchant point of view, and it was in France). 1st you have to set the rules: no bad practices of course and focus on generic terms for the performance based metrics (remove brand name and common mispellings). Then put targets on incremental traffic / business generated through organic search compared to a period of reference. Last include incentives above some thresholds. It worked pretty well. Of course it requires close coordination and trust (as most of the advertiser to supplier relationships).

almost 7 years ago

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