by Rob Laporte
Visibility Magazine – Summer 2013
Executive Summary
To what extent should web marketing agencies share intellectual capital with clients? There’s no hard and fast rule, and paid training is often a good compromise. The top arguments in favor of sharing are that it creates trust and impels the agency to focus on services that truly require its knowledge and experience. The top arguments against sharing are that the agency’s cost in producing good intellectual capital must be repaid, and clients often can’t implement the knowledge well enough or before it is outdated.
What is Intellectual Capital?
Sorry Wikipedia, but BusinessDictionary.com has a better definition of intellectual capital:
“Collective knowledge (whether or not documented) of the individuals in an organization or society. This knowledge can be used to produce wealth, multiply output of physical assets, gain competitive advantage, and/or to enhance value of other types of capital. Intellectual capital is now beginning to be classified as a true capital cost because (1) investment in (and replacement of) people is tantamount to investment in machines and plants, and (2) expenses incurred in education and training (to maintain the shelf life of intellectual assets) are equivalent to depreciation costs of physical assets. Intellectual capital includes customer capital, human capital, intellectual property, and structural capital.” (www.businessdictionary.com/definition/intellectual-capital.html)
Intellectual capital is a major management discipline, with tons of published books and other literature. An excellent primer I read years ago is Intellectual Capital: Realizing Your Company’s True Value by Finding Its Hidden Brainpower (1997).
Regarding the economics of FREE!, Chris Anderson’s excellent book Free: How Today’s Smartest Businesses Profit by Giving Something for Nothing discusses economic models and cases, some of which are relevant to search marketing. But giving away core capital, especially when the recipient needs considerable skill to actuate it, is not the focus of Anderson’s book.
Good Reasons Not To Share
I list reasons not to share in roughly descending order of importance.
- The paramount reason not to share is that valuable intellectual capital requires lots of time/cost to produce. It’s like researching, blueprinting, prototyping, testing, and manufacturing a new industrial tool, and then just giving it away to factories. Unless this is somehow a loss-leader, the agency will suffer, which means that sooner or later its clients will too.
- Search marketing, like law and medicine, is complex and often requires seasoned judgment to implement effectively, so if the client mis-applies it, you risk dissatisfaction and contributing to harm. Like, don’t use The Couple’s Do-It-Yourself Vasectomy ebook.
- Similar to the preceding point, clients may use your intellectual capital after enough time has passed that it’s no longer the best way. Popular keyword research tools, for example, have degraded recently, and my firm has had to completely restructure our keyword research process. Another example is that the recommended character count of tags recently became shorter than most free guidelines out there indicate.
- A kind of butterfly effect emerges when using complex intellectual capital. No matter how thorough the training documents, there often arises unique little decisions that have big consequences, and experienced agency employees are more likely to handle such decisions well. For example, keyword research sometimes produces anomalous data that the experienced professional will more likely recognize.
- Clients often overestimate how much time they have to learn and implement intellectual capital in search marketing. The job ends up not getting done, or gets done but cannibalizes what the client should have done instead, like improve their offerings and customer service.
- Once shared, the recipients–or their employees and other web marketing vendors–could sell it. My firm once trained a company to do all SEO for their family of websites (for a substantial fee but the lesson here pertains to free as well). By wild coincidence, a few weeks later I learned that the client or someone working there sold all the step-by step documents to a prospect of my firm for about half the cost. Of course I didn’t land that prospect. True, giving it for free implies no strings attached, but such profiteering undermines the spirit of free, especially if no credit is given to the originator.
Good Reasons To Share
I list the reasons to share in roughly ascending order of importance.
- Sharing key intellectual capital impels one to focus on the most complex and valuable services that clients can’t learn quickly enough to be practical, thus pushing the agency to develop services that truly add value commensurate with billing rates. Such focus makes vision and wisdom more important than mere tools and unwashed information.
- Of course publishing intellectual capital on the web builds authority and may produce inbound links and subsequent organic traffic.
- “Mother Theresa was a Junkie”–helping others feels good, and lifts us all.
- If the client to whom one has given intellectual capital uses it to make more profit, they will have more to spend on the endless list of web marketing tasks for which the agency’s expertise is required.
- Perhaps the best reason to share intellectual capital with clients is to establish trust. The rapid proliferation of web marketing channels and complexity within channels requires that clients trust agencies to prioritize investments optimally. When a client’s mind rests assured that the agency is 100% on their side, the business relationship endures, which builds the agency’s other major intangible asset that accountants increasingly quantify: good will.
Case Histories and a Good Compromise
One case where I decided not to share involves SEO tools. I’ve been sharing with clients and prospects WooRank.com and MajesticSEO.com for getting a quick SEO technical audit and link reports. Yet I recently discovered a fantastic tool for CMS-SEO audits that I feel I need in order to do our core work and sales talks. I’ve spent scores of hours evaluating such tools, and, crucify me, but I just can’t get myself to divulge this crucial discovery now.
In general, I feel that search marketing firms should freely share executive-level guidance on how to prioritize search marketing, but keep detailed step-by-step procedures in-house. The detailed steps are too prone to rapid changes these days, so that the sharing can do more harm than good. A recent case of this was a client who, over days of labor, followed HTML title rules built into a popular CMS add-on, and then learned from me that those rules are no longer valid, so he had to spend many more hours rewriting. In a similar case, a business used free intellectual capital regarding keyword research tools, not knowing that those tools are no longer worth using for long-tail phrases. A lot of the business’s time was wasted not only in keyword research, but also producing a demand-based navigation hierarchy and writing SEO’d content. Presently, good doctors know that some popular arthritis medicines actually makes arthritis worse while covering the pain, yet many people still demand that medicine. Complex and rapidly changing professions often must attach caveats to what is shared freely, and a continuing paid relationship can prevent harm.
Paid training packages are a good compromise. This isn’t pure sharing, but it often conveys a lot more value than the client pays for. When clients pay, they are more likely to use the knowledge soon while it remains valid. Compromise like this is part of any successful long-term relationship.