I talk to a lot of attorneys who are doing PPC advertising, but do not have their own AdWords or Bing accounts. If they log in at all, they log into some interface provided by their service provider that provides them very limited information and a fraction of the features that they get with a full blown AdWords account.
As we know, AdWords can be quite complicated, so they think to themselves they are better off using one of these services. Two of the big names out there for law firms are Yodle and Reachlocal. However, these are not third-party AdWords managers. These companies are in essence "Paid Click Resellers," who make money by marking up the click costs.
Here's how their business model works: a Click Reseller sets up a web page for the law firm advertiser, for example ABC Law Firm. The Click Reseller also sets up a PPC ad campaign comprising of keywords, ad copy and website page for their client.
The Click Reseller then, on behalf of ABC Law Firm, bids on keywords at a search engine such as Google. When a searcher clicks on the ad for ABC Law Firm on Google, the Click Reseller makes money by charging ABC Law Firm a markup on the cost of the click that Google bills the Click Reseller.
It's reported multiple places online that the typical mark up on the cost of the click is 50% and that some Click Resellers have been known to mark up click costs by as much as 300%. (Reachlocal is a publicly traded company (RLOC) and apparently this information can be found in their SEC filings, but I have not performed that research at this time.)
This type of markup is unheard of in the SEM agency world, where a good PPC management company may use a variety of pricing models for their services, but rarely mark up more than 20% of ad spend and are typically closer to 10-15% of ad spend.
Google AdWords Authorized Reseller Program to Shut Down
Now, there has been no official announcement from Google and their Authorized Reseller program website is still live, but it is also being reported that Google is ending its Authorized Reseller Program. The program as it exists today includes around 30 PPC Management companies. ( http://www.google.com/intl/en/ads/premiersmbpartner/advertisers-findpartner.html )
A Good Thing for Agencies and Small Businesses
The program has been a great way for Google to gain more customers, but has not been good for the customers themselves due to the extreme markups by the Authorized Resellers and the lack of transparency.
This change will ultimately force PPC Management companies to be more transparent about their fees. The market will become more competitive and law firms will be able to compare agencies service, results and fees fairly.
To their credit, Click Resellers do offer the ability to start up an ad campaign easily and quickly. But once the PCC ad campaigns are initiated, the small business is burdened with the high click markup on a recurring basis.
The high click markup on a PPC campaign can lead to a high conversion cost. This means that the cost of acquiring a new client could cost the small business significantly more compared to using a third-party AdWords manager.
Paying more than is required is, of course, not a sustainable and effective way of conducting your law firm's marketing.
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