Revenue sharing model is must for web marketing firms
Personal note: I loved the iPhone apps session at Digital Avenues. I personally recommend to try the team. I loved the project manager who presented it, he was damn confident. Loved their gang. Best of luck
I have been a fan of Incentive structures for years (with teams and clients). I remember when I worked on an incentive structure for a growing web based company that focused on content team, link team, development team and marketing team separately as well as together. The incentive structure was very much loved by the team members but was scrapped by the VCs as they could not understand it (Some of my failures/learning experience). That 2 months of study on incentive structures is helping me. My last incentive structure was made in less than 2 hours (+4 hours for excel representation). One of my biggest achievement is the incentive structure for Link Building team that respects the quality and quantity. This is helping many companies scale up their link building team.
Why a good revenue sharing model must for web marketing?
Get the facts right. Most of the web marketing team members are not mere team members but they are a company in themselves. Any team member can spend another 2 hours and earn extra dollars. Most of the web marketing/SEO companies (and the clients) are paying fixed monthly payments. Now this forces everyone to do things that fits the monthly payments. I know a person, who will complete his 9 hrs in the office and do extra work to get some more dollars.
A good revenue sharing model is must for web marketing firm as:
- It will motivate its team members to think in the right direction (ie; sales, making profit for clients). They things like directory submission, article submissions will take a back stage and conversion improvement, website usability, talkability etc will surface.
- It will make the team members own the project. A less talented person with ownership feeling is much more effective than a top-filled talent house without ownership feeling.
- It will allow the team members earn more money by showing results and most importantly this money pays off dividends for almost your life time. Team members will then spend more time for your project than your competitors.
Why revenue sharing is important for clients
One reason: Your chances of becoming a success increases 
. When the team works in the right direction, spends more time and money in the right direction, the results shows off really well. By spending $1000 if you are getting 50 sales then by spending $1000+10% revenue you might reach 150 really quick. With normal circumstances 150 will take you some real good time. It surely helps you reach bigger targets faster.
Also with a good revenue sharing model a web marketing firm will not waste your money on wrong things. They will only do those things that will increase sales not something that is chargeable. It saves a lot and lot of money for the clients.
It is equivalent of having an internal team.