Yahoo decreases discount for UK agencies

Sun 14 December 2008 12:39, Bas van den Beld

Yahoo decreases discount for UK agencies

Yahoo! is scaling down the discounts they are giving agencies in the UK starting January 1st 2009. Until now agencies which spent more than 80.000 pounds a month on Yahoo! get a discount of 10 percent. Starting January this will be cut back to four percent.

The UK agencies were informed this week through a memo send by the Yahoo UK-office. It stated that agencies spending over a 100.000 pounds would get a discount of 9 percent. Chances are that the reduction of the discount will only push agencies away from Yahoo even more.

Yahoo calculates the discounts over a period of three months. However agencies can 'earn' an extra one percent if they show a "year on year growth in investment".

The restructering of the discounts will very likely drive more agencies away from Yahoo. With Google gaining more and more ground in the UK chances are that most agencies will switch to Google.

Agencies are also surprised by the Yahoo actions. Yahoo gave the agenices only two weeks notice before implementing the change. When Google changed their scheme they informed the agencies 18 moths in advance. The short notice by Yahoo may be caused by all the changes (new board members, possible takeovers and lay offs) at Yahoo in recent months.

Yahoo recently also announced the closure of their Dutch offices. The London offices will be taking over the accounts handled by the Dutch. It is not clear wether the Dutch agencies will be getting the same scheme. For now only the policy is for UK-agencies only.

The memo sent by Yahoo to the agencies:

I am writing to notify you that the Yahoo! Network will be changing its search marketing agency discount policy in the UK only, with an effective date of 01 January 2009. 
The Yahoo! Network's intention has always been to support agencies and allow them to plan effectively. This firmly remains our intention and we will continue to provide agencies with a search marketing discount throughout 2009. Our new policy is consistent in approach to our previous agency discount policy, in that payments will continue to be made on a monthly basis, with open and transparent levels of discount.
As of 01 January 2009, our agency discount policy will be restructured.  Agencies spending from £50,000 to £99,999 per month will be eligible for a 4% discount on their total monthly gross spend. Those spending £100,000 per month or more will be eligible for a 9% discount on their total monthly gross spend. The discount applicable to an agency will be set on the basis of their gross monthly average spend on search marketing with the Yahoo! Network calculated through the rolling 3 month period.

For example, spend in November 08, December 08 and January 09 will be used to calculate the January 09 discount.  Spend in December 08, January 09 and February 09 will be used to calculate the February discount.  The discount rate can change month on month depending on the three month rolling average.
An additional 1% rebate will be applied by the Yahoo! Network to agencies that achieve a year on year growth in investment with our search marketing product. This will be calculated at the end of 2009, and applied retrospectively.

We believe that given the continuation and transparency of our policy and the commitment to its basic structure, we will allow both Yahoo! Network and third parties to work together for the continued growth of the market. In partnership, both Yahoo! Network and agencies will continue to dedicate a premium standard of resources to give marketers the knowledge, experience, confidence and results required to help grow the market. This includes marketing intelligence, research, best-in-class technology, product innovation, analytics, reporting and experienced account management.

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