I wrote earlier of Google ending/cutting commission payments to agencies in Europe as of January 1. Google under fire for scrapping agency commission from intellagencia and IPA wades into Google commission row look at the to-be-expected pushback from agencies.
In particular, the UK's IPA Digital Marketing Group has put out a statement (sorry, couldn't find it on the IPA site that wants you to log-in to do much of anything there) that it has deep concerns that
- The move might undermine the trust between agencies and clients
- Was driven by Google's financial self-interest
- The qualification levels are unrealistic.
Of course, the fact that search marketing firms and other agencies have done well without commissions outside of Europe kind of undermines those arguments. I have no doubt the change is going to be hard for many agencies. Outside Europe, agencies have evolved to justify their services and time by getting compensation by adding on top of what search engines charge, often on a percentage or flat-fee basis. Europe hasn't grown up that way, so a commission cut will obviously be a blow -- though not as bad as if it was entirely removed.
The Search Agency Burden from Kevin Ryan at iMedia Connection also looks at the issue, finding it will help smaller players, rather than hurt them as the IPA argues. He also seems to like not having discounts, as that keeps the focus on the services an agency can provide.
Finally, I started out saying Google was ending/cutting commission payments. What's with that slash? As far as Google is concerned, commissions will be ending entirely. In their place will be an entirely new "best practices funding" that may pay up to 15 percent back on spend. Why's that different from a commission? It's not going to be, for many. The best practice funding doesn't come with any strings on what you spend it on.