Search engine marketing is crucial for the success of online businesses -- but should you take on search marketing in-house, or outsource this challenging task to a contractor or agency?
A special report from the Search Engine Strategies 2003 Conference, December 9-11, Chicago, Illinois.
A panel of experts at the recent Search Engine Strategies Conference in Chicago addressed these issues to help business owners make better decisions about their future search engine marketing campaigns.
"In case anyone hasn't noticed, search engine marketing has exploded over the last few years" stated Nate Elliot, online marketing and media analyst for Jupiter Research. Elliot also pointed out that as recently as 1997, search engine marketing barely registered as an industry -- this in contrast to the $1.6 billion (or roughly 28 percent of all online advertising spending) spent on search advertising in 2003. Although companies have steadily decreased investment in banner ads and other forms of online display advertising, search engine marketing continues to move the industry forward.
Because of this growth, management of search engine marketing campaigns is becoming more complex. Jupiter Research reports that over half of all companies with annual ad budgets of $1 million or more are purchasing hundreds of keywords and nearly one quarter of those companies are purchasing more than one thousand.
As businesses face greater competition online, advertise across a wider range of search engines, and purchase more keyword phrases, it has become increasingly difficult for companies to handle campaigns internally. In fact, a recent study by Jupiter Research showed that half of all large marketers and over 30 percent of small marketers had trouble managing their own search engine marketing campaigns.
With larger SEM campaigns comes a strong interest in more detailed tracking and reporting. Search engine marketers are quickly moving beyond simply tracking the number of clicks that a particular campaign or advertisement produces. Instead, they are focusing on detailed conversion data and calculating the return on investment for each campaign.
Many large marketers (68 percent) are now tracking the number of sales produced by an SEM campaign, while 53 percent track the number of leads. Additionally, 32 percent of large marketers are tracking the number of registrations from a campaign and 29 percent are starting to track associated brand lift. Smaller companies are also putting effort into advanced campaign reporting. Forty-five percent of small marketers track the number of sales a campaign produces and 47 percent now track leads.
The combination of expanding campaigns and the desire to carefully track campaign details is causing many companies to look to third-party firms to manage their search engine marketing. Jupiter Research reports that 48 percent of large marketers and 23 percent of small marketers are currently outsourcing their SEM programs. Their studies also show that 80 percent of companies that outsourced are significantly more satisfied with the performance of their campaign (compared to just 58 percent for those that handle SEM in-house).
Jupiter Research's reports clearly indicate a trend toward outsourcing SEM but for companies yet to make the transition, how should you select a vendor? First, it's important to understand the range of services that search engine marketing companies offer.
- Organic optimization occurs when a company edits the content and code of your Web site to improve rankings in the natural (organic) search results of an engine like Google or Alta Vista. Organic optimization often includes tactics like link building and copy editing to add desirable keywords or phrases.
- Post-click optimization works to ensure that users who visit your site from a search engine follow through on the actions you want them to take. This may include testing marketing messages to entice users to purchase a product or testing special offers to encourage new subscriptions to an in-house marketing list.
- Automated submissions such as pay-for-inclusion and trusted feed management help ensure that Web site content and ads are quickly and appropriately listed in the search engines.
- Bid management services are often offered to help make certain that your pay-per-click ad stays in the position that you want, at a price you can afford.
- Post-click reporting helps Web site owners track the effectiveness of particular campaigns and include information like cost per sale, profit per click and conversion rates on different keywords and ad messages. This information allows companies to fine-tune search engine marketing campaigns to increase performance and lower costs.
- As search engine marketers research applicable keywords and phrases as well as perform other associated SEM tasks, they are often able to recommend market expansion opportunities, identify new target audiences, or assess interest in new products or services. Additionally, SEM work provides an expanded view of the competitive landscape.
With such a wide variety of services and varied definitions of SEM terms used by search engine marketing professionals, it can be difficult to get a true "apples to apples" comparison on proposals for service. Chris Sherman of SearchEngineWatch.com suggested that companies consider creating their own request for proposal (RFP). Companies can carefully outline the specific services and price ranges that they are looking for and send it to the SEM firms that they are considering. (For more information and a sample RFP, check out the SearchDay article "Outsourcing Search Engine Optimization."
It's also important for companies to decide what services are important to them and to seek out search engine marketing firms accordingly. Sherman explained that it's important to think of your strategy when making decisions about hiring a SEM firm. "Don't think we're going to do organic or we're going to do paid placement... consider what it is you are trying to accomplish and then plan a strategy and a plan of action accordingly."
Sherman also pointed out that your marketing goal should dictate the method of promotion -- not the other way around. For example, companies that wish to quickly move excess inventory or to promote a seasonal offering may find that paid placement is their best option because these campaigns allow companies to purchase positions by keyword phrase almost immediately while allowing them to cancel their listing as soon as the promotion is over. Companies with long-term branding and ongoing traffic may wish to invest more in organic search listings, paid inclusion feeds and link building campaigns.
Sherman stressed that with the exception of some small to mid-sized businesses that have relatively unchanging content on their Web sites, it's a good idea for most companies to consider hiring a third-party to manage their search engine marketing needs. Sherman explained that the industry changes so quickly, it's nearly impossible for those outside of the industry to stay on top of the latest trends and changes that can have an impact on rankings and presence in the online search space. SEM is a time consuming process with things like PPC bid monitoring quickly becoming full-time jobs for some companies.
Josh Green, director of e-marketing for Road Runner Cable has experience in selecting an SEM vendor. He is currently outsourcing the Road Runner Cable search engine marketing needs to three different firms, with plans to add a fourth firm to the mix. Green suggested speaking with other companies happy with their search engine marketing campaigns and asking for referrals to their SEM partners. He also suggested attending industry related conferences and approaching speakers or individuals at networking events to find out who they recommend working.
When it comes to the selection process, Green suggests that companies consider the following:
- What are the expected results from the company? Have you seen examples of their past work or spoken with previous clients? Has the company demonstrated that they are knowledgeable in the industry and have the resources to handle your account?
- What technology and experience can they bring to the table? Do they have experience with your type of Web site? Can they provide solutions for e-commerce and dynamic sites? Can they help you with ROI tracking and campaign reporting?
- What are their relationships and leverage with search engines? Larger agencies that spend more money with the search engines often have an easier time getting questions answered and can get search engines to be more responsive to specific account issues.
- What is your comfort level with the company? Do they speak a language that you understand? Do your personalities mesh so that you feel comfortable working through problems with them? Are they used to working with companies of your size and with similar needs?
Daniel Perry, search engine specialist at Career Education Corporation oversees nearly a dozen SEM firms working with more than eighty sites owned by his company. Perry explained that they hire multiple firms to handle their Web sites so there isn't a heavy reliance on any one firm for their search engine marketing needs. For large company looking to promote multiple Web sites, Perry recommends testing the abilities of a particular firm without committing all of their business to them. This has allowed Career Education Corporation to select firms that performed well and to give them additional sites to work on.
Companies looking to outsource their search engine marketing campaigns also need to understand that SEM is not cheap. Prices range from $75 to more than $200 per hour while full site optimization can start at $5,000 for a small site. Larger companies seeking to outsource full scale search engine marketing campaigns for e-commerce sites can expect to pay anywhere from $20,000 on up to more than $100,000 per year. While pricing levels can be daunting, it's important to remember that a good search engine marketing campaign can pay for itself several times over. Additionally, many firms are becoming more flexible with their payment terms and pay-for-performance and revenue sharing deals are becoming more commonplace.
For additional information on selecting a search engine marketing firm and for directories of providers, you may wish to check out the following sites and articles:
Finding Search Engine Optimization Professionals
Chris Sherman provides some tips on selecting an SEM vendor in this article from the Search Engine Watch Archives.
Search Engine Marketing Professional Directories
SEMlist is open to all firms that offer SEM services. Firms are not testing or rated, the site simply aims to act as a directory of search engine marketing firms.
SEOPros aims to provide consumer information about the services search engine optimization consultants and firms offer. SEM firms pay a listing fee and are reviewed before being listed in this directory.
This directory features sites that have been reviewed and approved for listing. Detailed company profiles include information on experience levels, training and education and industry involvement.
Jennifer Laycock is the Web Search Guide for About.com.
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