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Online Marketing Contracts: Opening the Kimono

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Contracts

On day one of SMX Advanced Seattle, the contract kimono was officially opened. Yeah, baby! ThirdDoor Media Partner & President, Chris Ewell moderated the first session of the Business Issues Track, which featured speakers Marty Weintraub, President, aimClear, Will Scott, President, Search Influence and Lisa Williams, President, MEDIA forte marketing.

The trio of seasoned panelists tackled everything from scope fundamentals to legal and liabilities. Read on for full coverage of the session and an illuminating peek beneath the contract kimono…

Considering the cost of lawyers and the logical notion that search marketers prefer to make money rather than give it back to clients, the Opening The Contracts Kimono: Translating Your Pricing Model To Legal Agreement session  was well worth the price of conference admission.

Each speaker gifted the audience with insights, offering a glimpse into his or her own legal contracts, pricing and methods of providing search marketing services. They gave us an opportunity to, frankly, “learn from their failings.” It was like being invited to a private party where the host hired sushi chefs to entertain guests, but they entertained us with legal warranties. Dessert was served when the same chefs began strip dancing, allowing us to see beneath their contract kimonos. Are you salivating yet?

Will told me that Marty wanted SMX attendees to leave the session feeling confident about talking shop with their attorneys, armed with a deeper understanding of the language used when writing business contracts. (Later, Will added that Marty also admitted quite candidly, “The only reason I asked you to be on this panel is to get a copy of your contract.” :) )

Yes, that’s right. Everyone in the audience had the pleasure of ogling 37 pages of excerpts from contracts used by Marty Weintraub, Will Scott and Lisa Williams.

(Palms sweating, heart racing.)

No electronic versions of the contracts were shared. Why? Simple: they didn’t want us to straight up copy and paste contract language into our own SEM contracts. Rather, they encouraged us to seek advice of an attorney for the best of all parties. For those of you who could not make it to the session’s delicious legal buffet, pick up your chopsticks and savor a synopsis of a few of the juicy legal details.

Scope
It all begins with the scope! As Marty explained, you don’t just say, “We’re going to do SEO and this and that with a thousand lines of copy.” More must go into it than that. Our job as marketers, he explained, is to help clients understand that we are going to use various tactics tailored to their audience and need.

(At this point, Marty was waving his hands in the air. Despite the session’s extended metaphor, I was glad he wasn’t wielding a sushi knife.)

Demographic Research
Present the client with a scope of demographic research complete with market segments as well as what they sell and to whom. Include language that indicates you will perform radical user intelligence that moves past keyword research.

Sample Language: “…demographic research that spans multiple disciplines of online marketing…”

In other words, you will inquire about other people (competitors included), find search inventories, map them to social, and identify Facebook PPC segments as well as topical niche communities across other social channels.

The overall goal is to provide scope with language that describes how you are going to help them grow. Outline that you aim to find and develop social media, PPC, and SEO tactics that will allow them to develop as a company.

(Marty then shared one of those “head-tilt” comments about searching for and going after competitors’ legacy SKUs, and that you can go “do it” in YouTube to rank in organic search for their terms. Cha ching!)

Digital Inventory
Facebook is a channel, not a strategy. Google is a channel, not a strategy. Include a “Digital Inventory” clause that indicates you will identify which channels (segments) you plan to target. Make this research part of the contract. Deliver it as an XLS file divided into market segments and your estimated spend.

Reporting & ROI
Express to the client that you will use KPIs to advise and control effective channel to market to. Identify low-hanging fruit, if it exists. Also, identify how you are going to deliver reports. This may require building more specific meeting schedules (aka: time and money) into the contract.

Obviously the goal is reasonably prudent ROI. Consider including “WTF – bullshit to protect Marty” language.

Sample Language: “Our fee is not included in the calculation of ongoing profitability.”

Costs
If the task budget is simply “not to exceed,” where do you go? Marty’s suggested reply: “It’s based on if you are making money. And that shuts them down!” You may use flat-rate contracts, but do yourself a favor and cap hours. Don’t overinvest yourself. Be sure to use scope enhancement language, ala: “If you want us to do anything else, we will but here’s the rates…” Clearly indicate what’s extra, for example, advising client and vendors on how to make a website, and training them on how to maintain the site.

aimClear contracts spell it O-U-T:

  • “Initial Retainer with project budget not to exceed $______”
  • “Subsequent Retainer to cover how to handle when the initial retainer is depleted and if they fail to request a subsequent retainer…”
  • “Monthly retainer and billings…”
  • “Final take away is that for hourly work, minimum billing time is 1/10th of an hour.
  • “Methods of Determining Fees with varying cost rates (no $ amount given)…”

(Ahhh… open that kimono, Marty!)

Will shared that Search Influence is a production house and works with smaller clients, about $300 to $8,000 per month and larger. Will’s juicy contract documents included sample “main street customer” packages. They scope by units of work at $60/hour, which could be an hour of someone writing a press release, for example.

(There were a couple gasps in the back of the room when the low cost was announced. Remember… “production house.”)

Will has been able to scope work out by focusing on systems. His team takes the tactics they know are effective and turns them into “systems to teach entry-level college graduate.” Thus, costs can be kept down.

Lisa revealed language for Project Based, Hourly and Pay for Performance. Her project-based breakdown is over a 12-month period. Her hourly is on a 6-month contract.

Sample Scope Language
Below is the scope language you can more or less cut and paste:

Adapt and augment existing demographic research focused on identifying market segments. Conduct social interest & KW research. Deliverables are .xls files segmented by master interest/keyword segments. “Master keyword segments” means keywords sorted to sufficiently delimit categories and sub-categories, suitable for future SEO & Social usage, but not segmented enough for responsible deployment in AdGroups. The focus for this phase is:

Perform Competitive Intelligence to research competitor’s previous and existing paid, organic and social marketing campaigns to see what was effective and their spending patterns…

Legals & Liabilities
As the saying goes, “good fences make good neighbors.” Such was Will’s approach with suggestions to use “overly-restricted language to limit liability.” He pointed out that it is “a lot less expense to pay your lawyer on the front end rather than on the back end or go to jail.”

(Ears popped up. Room got quiet.)

These key points really hit home:

  • “We are all at the mercy of the people. We’re in an industry we don’t know for sure. We have no control other than study.” In other words, “It’s not my fault, so don’t try to sue me for it.”
  • Ensure your legal contracts have a safety net that, in legal terms, says, “We are not responsible for more than anything you paid us.” Make sure your contracts ensure that in no event shall either party be liable for any lost profits.

Personalities & Contracts
Panel discussion made it obvious that each speaker had a different approach to the legal aspect. You could say they each wore different kimono styles…

  • Lisa tends to cater to clients with a nice approach… “It’s all about you”
  • Will lets his lawyer take control of contract… “It’s all about me.”
  • Marty is right down the middle… “Let’s dance, baby.”

Laughter broke out when Will remarked, “We sweet-talk to [clients] in the proposal and put the screws to them in the contract. Our proposal is 12-point type, single column. Our contract is 8-point, double column.”

The moral of the story: no matter how good your relationship (or friendship) is with client in beginning, remember clients don’t like losing money. If they feel at risk, they may lose their sense of humor. As Will smartly warned, “Don’t lose potentially thousands of dollars by limiting your liability.”

Sample Legal Language
Here’s some more legal language you can cut and paste (well, sort of):

CONTRACT TERM AND TERMINATION:
1) Search Influence’s (Hereafter referred to as SI) services shall begin only after this Agreement has been signed by all parties, Client has completed and signed SI’s Automatic Credit Card Billing Authorization Form, and SI has successfully received and processed Client’s first payment as set forth herein above;

2) This Agreement …

Terms
Project Based. Consultant shall invoice Client on a by-project basis for all work provided and approved. Client shall pay all invoices within 15 days of receipt. As outlined in ____ Proposal, the payment schedule shall read as follows:

  • 25% at time of contract signing
  • 25% after acceptance of online marketing plan
  • 20% after achievement of first 3 month goals
  • 20% after achievement of first 6 month goal
  • 10% after achievement of first 12 month goals

Consultant dedicates at least X hours for project during X period with the understanding that work needed to achieve goals will be completed by Consultant and additional hours as needed for set goals (as outlined in ____ Proposal). Additional work required not inclusive of set goals will be billed at $X per hour…

Compensation & Business Model
Lisa is one confident SEM marketer. She does Pay-for-Performance with select clients. For real. Few among the audience raised their hand when asked if they were brave enough for such. Regarding costs of Pay-for-Performance, Lisa shared that “the metric you need is sales, and what we want to focus is on sales. It’s not [a good fit] for every client.”

The common sound byte of concern is that “there are too many problems for attribution.” Lisa agrees. However, it’s viable for her when she’s working with the right client that has potential. Mediaforte Marketing, for example, takes their regular fees plus a percentage. They have doubled their fees using PFP. As an external resource for the audience, Lisa pointed to Stoney deGeyter’s article in Search Engine Guide that the SEO pay-for-performance model is not viable.

Marty added, “We are working with data we don’t know yet.”

(PFP feels to me how a sushi chef might feel inviting his or her customers into the kitchen. I’d want to say, “Be careful when playing with sharp knives.”)

Contract Points & Models
Lisa’s compensation and business models are focused toward having a good time with customers. A few paraphrased takeaways from her delivery:

  • Creating expectations is critical.
    • Clients are confused about what we do. It’s a little bit of voodoo, art, and science. They have to trust us.
  • Keep it simple.
    • The hardest part of tracking progress is attribution. By default, you assume all of the gains will be attributed to SEM.
    • If clients have other campaigns they can clearly track, Lisa goes into it together, sharing risk and benefits!
  • Base it on data.
    • Compare against data from last month and last year. Subtract this year and use the delta.
    • Get to know what the profit margins are to see if you can push for 10%.
  • Know your stuff. (Don’t bullshit.)
    • Be clear about what you know and what you don’t.
    • For the stuff you don’t know, communicate to the client that you can find people who have the expertise.
  • Be friends.
  • Fire clients, if necessary, or don’t even take them on.
    • Be able to say, “It might be best to go elsewhere…”
    • Inform them not to question every corner of what you do.
  • Identify what you do when they mess up.
    • Incorporate language that addresses what will happen if clients are not following recommendations, questioning recommendations or not understanding what you recommend.
    • Sample language: “You may not change site architecture or change the URL structure. We are not responsible without written or express approval.”
  • Practice dispute resolution.
    • Mediate to get through the issue together.
    • Be flexible.
  • Keep the Relationship.
    • Provide a win for you and the client.

Key Takeaways From Beneath The Kimono
The panel agreed that one purpose of contracts is to ensure you get paid for your time.
Don’t put in 50 hours of research into writing a scope or contract. But do make sushi and serve your customers to keep them happy!

In a nutshell, Marty, Will and Lisa “kitchen sinked” it for us. We were taught to not eat it (the legal sushi) all at once– even though there was so much food on the proverbial plate in this session it took all day to assimilate the delectable morsels shared. Fortunately, Alan Bleiweiss live blogged it for Bruce Clay, and you can check his SMX contracts coverage. (He actually caught the lawyer jokes!)

Want more about legal language? Marty suggested looking for Rand Fishkin’s stuff and putting that into your contract :).

Guest Author Bio
Dana Lookadoo is an SEO Consultant with a focus on search engine optimization and audience engagement. Dana has been involved in Internet Marketing since 1999 and co-founded two Web firms and an SEO agency prior to rebranding to Yo Yo SEO – Word-of-Mouth SEO. She has worked with fortune 500 companies as well as small businesses and takes a collaborative “in-house SEO” approach to consulting. Connect with her on Twitter @lookadoo and LinkedIn.

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