4 years - nothing much has changed in SEM space

I visited the SES Show after about 4 years, yesterday - in NYC. I was excited to be attending SES because this was the first show we attended after founding NetElixir - SES, San Jose 2004.
So much has changed in the search world. The power equation has changed considerably between Google and others. Disappointingly, not much has changed on the SEM space. The usual suspects, iCrossing, iProspect, Did-It, Efficient Frontier, were all there. There were new agencies and SEM tools. All agencies started their pitch by stating that their proprietary technology was awesome because... Back in 2004, they started the same way... Its disappointing.

But seriously, SEM companies are struggling to establish a differentiator. Everyone does the same stuff - only the presentation is different.

So, is there no differentiator in SEM space?

Yet, advertisers are stressed - they complain about their agency or their SEM technology.  They would do so only when there is a need gap.

What is the need gap? Here are some standard replies on "stress points" that we collected when we conducted the 2nd Annual PPC stress study - a) meeting ROI target consistently  b) managing change (in account/in promotions being run, etc) c) increasing CPC d)Search engine function in an opaque manner e)ad copy quality  f) click fraud

Common sense would dictate that any SEM agency that addresses the above mentioned need gaps effectively should  crack the success formula. Why is it then that no one has been able to do this?

I would think the inherent dynamism of search advertising can be blamed for this. Like any other medium(example television), search serves ads that are consumed by  prospects and non-prospects. There is a difference, however, between search and (say)TV. In television you have set channels that telecast specified programs at specified times. The user's choice is limited - she can jump from channel to channel but she cannot spontaneously see what she wants to if no channel is telecasting the program of her choice. (The video sharing sites like YouTube tackle this better). In search advertising - the user chooses what she wants to see. The good part is that its mostly measurable - at least - you could get statistical data for user groups.  However, the advertiser has to  know what the user wants to see (predict) and moreover, categorize the user intent into monetizable and non-monetizable parts. The challenge is user sophistication while searching keeps evolving / improving. (Think of it like this - you are almost trying to peek into the minds of millions/billions of users - anticipate their usage sequence and be visible  in appropriate places). Understandably, this makes things very complex. To amplify the complexity, Google and other engines keep on tweaking the channel in their constant effort at dis-intermediation (and to keep their stock prices high)-thereby complicating things for advertisers and SEM agencies(and actually for themselves). Its also frustrating to see how Google tries to make money by purposefully creating complexity.

For an SEM agency to stay on top of all this and effectively address client needs (ROI, increasing CPC, etc) becomes an in-surmountable challenge. To make matters more complex, since search advertising LOOKS SIMPLE (whats so great about selecting a few thousand keywords and placing ads on them), every person thinks he knows the best. This is equivalent to a situation that you want to run TV ads and after you approve the ad and it is aired, you want to tweak around the ad a bit because you feel the product shot does not look as good as you wanted it to look. Since the advertiser has access to the search ad center (or mostly they do have - some agencies do not let their clients access their own account!!), they are not restricted from constantly making changes themselves.

The challenge becomes even greater because of the tremendous demand supply gap in trained SEM professionals and lack of standards and best practices. Most of the SEM professionals have learnt either by managing accounts themselves or by reading stuff and attending seminars. Everyone thinks they know the best because the account that they managed 3 months back really saw a jump in ROI. They think they have got the secret sauce to replicate the success. This is a big mistake. Each campaign is unique - every site is unique - every business is unique. Just because an SEM agency was able to deliver great results for a flower shop does not mean they will be able to do so for a pet food supplies shop.

So, is there no way out of this catch 22 situation.Can the SEM agencies do anything?

Well partially there is. Here is how.(And the pre-condition here is that the advertiser client does not make changes herself randomly)
1. Every account has to be approached with a fresh mind - ample efforts have to be made to understand the business/the goals/the plans
2. There should be a set service delivery framework. The engagement manager's role should be to combine the business' uniqueness with the framework. This requires dedicated focus. This requires time.
3. Business objectives should be fed into the technology. Just because the technology has the capability to optimize performance based on ROI does not mean anything for someone who wants optimization based on value per click or number of sales or (maybe) a complex factor that's dependent on multiple independent variables. In short, technology has to be customizable. Thats a whole new paradigm and we will discuss that in greater detail in a later post
4. Its almost like saying that the SEM agency's dedicated team will become a part of the advertiser's team - quite literally. They have to be super employees though - who have to not only execute efficiently but also advise and consult - spot trends and maximize opportunities arising out of the trends.And they have to do it "non-stop".

Will the above steps solve all the stress points that an advertiser has to face. The answer is NO. But, the agency that does all the above 4 points effectively, will have an enormous edge over all other agencies who are taking a set approach to all cases - using same processes and same technology -- and praying for strong performance numbers.

- Udayan Bose

Comments

[Chris Zaharias]

I don't know why you think the SEM companies you mentioned are struggling in any way. They're all doing high double-digit growth year after year. That's the 'success formula' in my book.

[Garipalli Gopikrishna]

Nice article. As you always write, even I was disappointed in recent Internet World show, which happened in Central London. There have been no changes in terms of SEM companies approach, services, technology and presentations. New SEM agencies presented the same old stuff and leading SEM agencies presented with some of new concepts like Web 2.0, Social Media Marketing, Mobile Marketing, SMS Marketing, Placement Campaigns, Contextual Marketing, Behavioural Marketing, Google local maps and so on. But I really felt, all of them are for short term results and can’t expect good ROI. One worst thing, which I have noticed is all top SEM and other offline agencies, blowing there money on gifts and drinks to attract the customers, which we use to do in olden days. "Old wine in new Bottle"

[home theater marketplace]

we are trying to get our hands around paid search right now...it's very labor intensive. I almost scrapped paid search a few times as it costs so much to run and we spend 250k per year on it.

[home theater marketplace]

we are trying to get our hands around paid search right now...it's very labor intensive. I almost scrapped paid search a few times as it costs so much to run and we spend 250k per year on it.

[SEM Companies]

nice article! that you are expecting something new in the SEM companies. Yes i agree that, since i know there is no change in SEM companies. SEM companies are those which provide effective SEM services to improve the visibility of website in search engines.

[SEM Companies]

nice article! that you are expecting something new in the SEM companies. Yes i agree that since i know there is no change in SEM companies. SEM companies are those which provide effective SEM services to improve the visibility of website in search engines.

[sem consultants]

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