Give away equity share in return for SEO / PPC work?

[cervezaman]

Been thinking about this for a while - bear with me!

OK, so we have a new online retail venture. We've done e-commerce before, successfully, and have now launched a new business having sold the last one 12 months ago.

The new site was launched in January and has around 1500+ SKU's, informative blog articles 3 to 4 times a week, really active FB page with 3000+ likes already. Our two main competitors in the market have a turnover of £5m and £10m respectively.

So, our site is up and running, and we've driven traffic mainly via PPC and FB. We've had a turnover of £60k so far. But, our PPC spend is high and we need to get some long term organic traffic coming in. We've been 'bitten' before by SEO companies who have tie-in periods, extortionate monthly fees and at the end of the day I couldn't really measure the results. I'm wary to go down that route again.

So, I was thinking about giving away a small equity share, perhaps 5%, in return for someone doing the SEO / PPC for our site for free. At the end of the day they'd be motivated to do a good job in return for owning a share of a potentially valuable company?

Any thoughts / problems you can think of?

[Frimley111R]

Don't, just find the best PPC agency you can. Giving away a stake will be a PITA long term, assuming you can find anyone to do it for that. Agencies don't want stakes in companies as their reward.

[andy-xr]

Paying in equity means you dont have any money, meaning people wont deal with you because they dont see a value in it. Any profitable and decent agency will walk the other way if offered that, leaving their Cash Upfront t's and c's on your desk on the way out.

[Hoofy]

Why not pay someone but give them targets to achieve if possible. If they are doing their job properly, it might cost you £1 a week but they return £3 of business a week. (Figures plucked out of thin air.) If it costs you £1 a week and they return 10p a week, then ditch them.

[cervezaman]

Hoofy said:

Why not pay someone but give them targets to achieve if possible. If they are doing their job properly, it might cost you £1 a week but they return £3 of business a week. (Figures plucked out of thin air.) If it costs you £1 a week and they return 10p a week, then ditch them.

I guess the problem is that it takes a few months before results are seen. They could be useless / not very good value for money and not actually achieve that much.

Actually what I want is someone to be really motivated to make it work!

[Hoofy]

cervezaman said:

I guess the problem is that it takes a few months before results are seen. They could be useless / not very good value for money and not actually achieve that much.

Actually what I want is someone to be really motivated to make it work!

You'd rather give 5% of your company away to someone who turns out to be useless, then?

If we're talking PPC and your website can convert visits to sales then if they improve visitor traffic, you should immediately see an increase in sales. It does, of course, depend on the nature of the business and product/service.

[Frimley111R]

cervezaman said:

I guess the problem is that it takes a few months before results are seen. They could be useless / not very good value for money and not actually achieve that much.

This is not correct. You should see instant results once they have optimised your campaign, at least within a few weeks. It's not SEO.

[cervezaman]

Hoofy said:

cervezaman said:

I guess the problem is that it takes a few months before results are seen. They could be useless / not very good value for money and not actually achieve that much.

Actually what I want is someone to be really motivated to make it work!

You'd rather give 5% of your company away to someone who turns out to be useless, then?

If we're talking PPC and your website can convert visits to sales then if they improve visitor traffic, you should immediately see an increase in sales. It does, of course, depend on the nature of the business and product/service.

No I'd rather not give 5% to someone who's useless

I want to give 5% to someone who can prove themselves with results and then get a share of my company. Whenever I've had dealings with PPC / SEO agencies in the past it's always seemed really, really expensive.

In my last business we had an SEO / PPC company managing our £500k p.a. Adwords campaign. Cost around 10k to set up and ongoing charges of 2.5k per month. We saw little difference in efficiency of the campaign or conversions.
Previously we'd used another company for SEO. Again high fees - little results.

[uber]

cervezaman said:

No I'd rather not give 5% to someone who's useless

I want to give 5% to someone who can prove themselves with results and then get a share of my company. Whenever I've had dealings with PPC / SEO agencies in the past it's always seemed really, really expensive.

In my last business we had an SEO / PPC company managing our £500k p.a. Adwords campaign. Cost around 10k to set up and ongoing charges of 2.5k per month. We saw little difference in efficiency of the campaign or conversions.
Previously we'd used another company for SEO. Again high fees - little results.

Unless you have exclusive rights to a popular product or are the manufacturer you will find it very hard to find someone to invest lots of time and effort for "possible" share in the business a few months down the line. If you are supper confident that you can compete and your business will scale then offer as a minimum to cover costs with a monthly retainer and then put a set contract in place for a scale - v - timescale based on pure digital marketing

[Hoofy]

cervezaman said:

No I'd rather not give 5% to someone who's useless

I want to give 5% to someone who can prove themselves with results and then get a share of my company. Whenever I've had dealings with PPC / SEO agencies in the past it's always seemed really, really expensive.

In my last business we had an SEO / PPC company managing our £500k p.a. Adwords campaign. Cost around 10k to set up and ongoing charges of 2.5k per month. We saw little difference in efficiency of the campaign or conversions.
Previously we'd used another company for SEO. Again high fees - little results.

You'll struggle to find someone who'll work FOC for 6 months (or whatever) before receiving a 5% cut of your business. Would you do it?

As I see it, you should see dramatic improvements. For the last business, you should have seen a minimum of £2.5k + £41k of business a month. Well, if you'd only seen that, then tbh I'd have tapped that on the head.

[cervezaman]

Hoofy said:

You'll struggle to find someone who'll work FOC for 6 months (or whatever) before receiving a 5% cut of your business. Would you do it?

I think I would do it. If I were an SEO / PPC specialist working full-time and could spare some time in the evenings and weekends then I'd see it as a bit of a punt.

[Hoofy]

cervezaman said:

Hoofy said:

You'll struggle to find someone who'll work FOC for 6 months (or whatever) before receiving a 5% cut of your business. Would you do it?

I think I would do it. If I were an SEO / PPC specialist working full-time and could spare some time in the evenings and weekends then I'd see it as a bit of a punt.

Fair enough. Back in the dotcom era, share options were quite common but there would be a basic salary as well (this was for full time staff, mind).

[Du1point8]

cervezaman said:

Hoofy said:

You'll struggle to find someone who'll work FOC for 6 months (or whatever) before receiving a 5% cut of your business. Would you do it?

I think I would do it. If I were an SEO / PPC specialist working full-time and could spare some time in the evenings and weekends then I'd see it as a bit of a punt.

I am in the process of giving away a lot more than 5% for a new corporate sales person, he's on commission only if he doesnt make his goal, if he does make the goal he gets a % of the business unto 20% in increments of 5% with clauses in place so he doesnt just get the goal and sit back.

[Hoofy]

Actually, one thing that bugs me is the ongoing charges. I'd want to know what I am getting for the 2.5k a month. If it's just monthly reports, they can FRO. I expect them to be spending a good few hours every month tweaking Adwords text to continually improve the clickthroughs while making those clickthroughs quality ones.

[KFC]

Turnover means absolutely nothing. I could set up a random ecommerce site tonight and start using PPC to buy turnover at a loss tomorrow.

The deal you are offering sounds like a suckers deal, I'd run a mile if anyone proposed similar. Doing SEO well costs a lot of money, its not just time. If you can't afford to pay to have it done then your business is horribly underfunded and failure seems likely. So you're asking me to work not only for free, but presumably to fund a lot of the seo. For a 5% share of a business thats likely to fail. No thanks.

[Pot Bellied Fool]

cervezaman said:

Hoofy said:

You'll struggle to find someone who'll work FOC for 6 months (or whatever) before receiving a 5% cut of your business. Would you do it?

I think I would do it. If I were an SEO / PPC specialist working full-time and could spare some time in the evenings and weekends then I'd see it as a bit of a punt.

Rather than equity - which is hard(er) to monetise - consider a commission based model. That way the SEOer is motivated and gets an instant reward for things happening. You can always set a baseline below which they don't get paid (i.e, just a little more than you're doing now without them).

With the right SEO bod, probably an independent freelancer rather than an agency, it can work well and is purely results oriented. It's something I do with a couple of clients - one ecommerce & one professional services where I'm on a percentage of deals that originated through his website.

[cervezaman]

Pot Bellied Fool said:

Rather than equity - which is hard(er) to monetise - consider a commission based model. That way the SEOer is motivated and gets an instant reward for things happening. You can always set a baseline below which they don't get paid (i.e, just a little more than you're doing now without them).

With the right SEO bod, probably an independent freelancer rather than an agency, it can work well and is purely results oriented. It's something I do with a couple of clients - one ecommerce & one professional services where I'm on a percentage of deals that originated through his website.

Sounds like a fair way of doing it. Maybe you could pm me your contact details and we could set up a call?

[KFC]

It doesn't take into account risk though. Its very easy to get a site penalised.

If you're paying an seo solely based on new revenue generated, he may just get bored/anxious/greedy and start doing things that have an unacceptable level of risk. He'll get paid a % right up till he gets you penalised, and you'll be left holding the baby.


If you have a serious online business then there is enough work to justify an in house employee. Personally I think the best choice is come up with a realistic budget (£100k+ a year) and use this to fund a decent seo's wages and leave some money left over for him to actually do something with.

I think if you can't or won't come up with a realistic seo budget then you're just playing at running a business; its a hobby. Its not 2009 any more, the cheap st seo tactics everyone abused in the past are long gone.

[cervezaman]

KFC said:

It doesn't take into account risk though. Its very easy to get a site penalised.

If you're paying an seo solely based on new revenue generated, he may just get bored/anxious/greedy and start doing things that have an unacceptable level of risk. He'll get paid a % right up till he gets you penalised, and you'll be left holding the baby.


If you have a serious online business then there is enough work to justify an in house employee. Personally I think the best choice is come up with a realistic budget (£100k+ a year) and use this to fund a decent seo's wages and leave some money left over for him to actually do something with.

I think if you can't or won't come up with a realistic seo budget then you're just playing at running a business; its a hobby. Its not 2009 any more, the cheap st seo tactics everyone abused in the past are long gone.

Some good points there KFC, and we were in that exact position in 2010 with an in-house SEO lad who got one of our sites penalised. Not good!

We're not 'playing at running a business' though - it's deadly serious as was our last business.

[KFC]

I think the problem might have been the timeframe. For small businesses, up till then to rank you were forced to break the rules. Buy links like they were going out of fashion etc. There wasn't really any third option... it was either buy links or don't rank.

So of course when Google cracked down on this loads of legitimate businesses ended up getting wiped out. Its rather unfortunate as Google forced them to break the rules in the first place.