Unfair tax on ad-spend of online must stop, according to new UK search marketing entrant, Keybroker

Unfair tax on ad-spend of online must stop, according to new UK search marketing entrant, Keybroker

Sweden’s largest search marketing company is challenging the norm for traffic-related pay with a new charging model based on achieving more profitable online sales.

Describing the standard UK approach as an ‘unfair tax on ad-spend’, Keybroker has launched in the UK with a model that it claims is truly performance related and which does not tie online retailers into long term contracts or retainers.

Keybroker’s approach in Sweden has so far attracted both corporate investment and leading blue-chip clients including American Express, e-bookers and IKEA. Client campaigns generated over £280 million of online sales in 2010 with Keybroker currently delivering over 6% of the total e-commerce spend in Sweden.

Now the company is poised for international growth, Keybroker UK has recently set up a London-based team led by Keybroker co-founder and chief technology officer Fredrik Holmé, who has moved across as UK managing director. He said: “We see an exciting opportunity here because we feel clients are being unfairly charged in the UK. We have already started our recruitment drive to build up our UK team.

Rewarding good performance

“Given the UK e-commerce market is probably the most sophisticated in the world, we have been surprised at the continuing use of spend-based pricing models that do not reward agency effectiveness and fail to incentivise true performance based marketing. Many search agencies here still tie clients into lengthy contracts and retainers, and charge fees that equate to a ‘tax on ad-spend’. Our view is that the performance focus should be on increasing client profits and selling more of the products that contribute net profits.”

The Keybroker service is delivered through a technology platform called CampaignControl. Holmén explained: “The system links front-end strategic decision-making with back-end inventory management. Based on Google search criteria, our integrated RealTime Ads technology is then used to promote selected products based on trading decisions, margin requirements and availability. The system drives down customer acquisition costs and increases profitable sales by attracting a higher percentage of relevant traffic and advertising the right products.”

Campaigns are driven by a team of multi-lingual analysts and campaign managers from Keybroker’s global delivery centre in Stockholm. The company said UK clients would be serviced from a specialist Keybroker delivery centre based in London.

Sharing in client savings

Keybroker added that aligns its objectives with client targets by operating a “success-fee” model. Fees are generated through taking a share in online customer acquisition cost savings and the effective uplift in sales volumes. The approach ensures Keybroker and its teams are proactive and consistently driven to secure positive results for clients. In addition, clients benefit from flexible contracts with typically three-month notice periods. There are no long-term contractual tie-ins, no retainers and no tax on ad-spend.

Online sales make up a significant share of overall UK retail revenues. Approximately 30% of these sales are derived from search marketing. For online or e-commerce directors the challenge is how to incentivise search agencies to help them hit their growth and profit targets. Keybroker said it believes retailers need to move beyond the traditional paradigm of buying traffic and take a more sophisticated and integrated approach to selling products. The technology is available to make this a reality.