Search marketing is a fast moving industry, with rapidly evolving business models. What's the best way to make money in this business?
A special report from the Search Engine Strategies 2003 Conference, December 9-11, Chicago, Illinois.
At the SEM Provider's Forum approximately 100 people gathered to talk about dealing with clients and business pricing structures. Interestingly enough we were all, on-the-surface, competitors and yet the complexity of being an SEM/SEO provider drew us together to discuss what in other industries would be held close to the chest.
The people in the room represented large SEM firms specializing in paid search marketing, popular search engine optimization (SEO) companies, companies moving from SEO to paid search marketing, pure SEO players, consultants and newcomers. The main topic was "How do you make money in this business?"
There were three pricing structures for pure SEO discussed: charge by the page, charge by the month, or charge by the number of keywords optimized. By the page optimization ranged from $100/page to $1500/page. People questioned the "by the keyword" model as it seemed to imply creating "special" pages for each keyword.
Larger companies with established reputations, experience and visibility in the industry typically charge a fixed price for the initial site review and keyword analysis, and then move into monthly maintenance agreements. It was very clear that companies/consultants who had established themselves early on in the industry and had maintained a "relatively" clean track record with the search engines, were charging more for their services than the more recent entries.
Many people asked about how to get more visibility for their services. eNewsletters, forum postings, SEMPO membership, organization directories, and speaking engagements were suggested. Individual SEOs with some experience may want to consider moving in-house as many firms are starting to see the high-value of SEM.
For paid search marketing companies there was a lively debate about whether or not you can make money providing pay per click (PPC) management services to small online businesses. The larger companies said that 12-20% management fees made money as long as the client was spending large amounts of money. If a client is only spending $2000/month on PPC then even a 20% management fee isn't going to go very far.
One participant suggested that small companies charge their clients a ramp-up fee to cover the cost of developing the keyword list, establishing the account and writing creatives. The management fee would then cover creative optimization, keyword expansion and bid management. Another participant suggested that the client pay a monthly retainer (some set amount of money) to the provider instead of making it based on spending. This was also suggested for SEO maintenance work.
Of course, everyone complained that many clients still felt that getting listed in search engines was all about optimizing meta tags, took no work to do properly, and therefore the cost of hiring an SEO firm should be minimal. As small businesses move towards tracking the actual ROI of their SEM activities, the more they will understand the value of hiring a search engine marketing firm to optimize their campaigns and keep them current in the almost daily changing world of search engine marketing. Until then, we need to keep raising the bar on quality of the services provided by SEM companies and consultants.
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