A WebmasterWorld thread reports on a Guardian Unlimited article that says Google will be discontinuing their "Best Practice Funding," which basically pays back some European agencies 3% to 8% of their ad spend each quarter.
This program actually earned some agencies up to £50,000 each year. The program is to be discontinued at the end of 2008. Damian Burns, head of agency relations for Google EMEA said:
Agencies are now at a level where they don't need a subsidy.
Everyone should be equal in an auction system, there shouldn't be buying clout, the value for clients is in how well agency campaigns perform.
This will now level the playing field for many advertisers. As you can imagine, this has been a hot debate over the years. Many agencies kept this program under the radar, to try to not 'ruffle any feathers' over this sweet deal they had with Google. We covered it back in January 2006 with AdWords Discounts for Big Agencies?
A WebmasterWorld thread has some reaction from these European advertisers. Although many knew this day would come, they didn't want to believe it. Some say that some agencies have not charged a PPC management fee, and solely relied on Google's commissions to run their business. This "free model" of PPC management has to be changed and there may be some client's lost over this in the European market.
Forum discussion at WebmasterWorld.