Building a search marketing company holds the promise of both meaningful profits and a lot of fun -- but it takes hard work and some savvy business sense to be truly successful.
A special report from the Search Engine Strategies 2004 Conference, March 1-4, New York City.
If you're stressed out over running a business in our super heated search engine marketing industry, you are not alone, according to three who have successfully nurtured their firms into comparatively substantial size and prominence -- in a an industry category that did not exist 10 years ago.
Cheryle Pingel of Range Online Media, John Lustina of Intrapromote and Fredrick Marckini of iProspect took time off from running search engine marketing companies to speak freely about what it takes to make an SEM company thrive.
And thrive they do. Pingel's Range Online Media is located in Texas and New York and employs 23. Intrapromote is headquartered in Cleveland and has 25 employees. Arguably SEO's oldest firm, iProspect is based in Watertown, Massachusetts and has grown to nearly 70 employees.
The panel, aptly titled "Coping with Growth: What's Keeping You Up at Night?" was part of a well-attended day-long track premiering at Search Engine Strategies in New York City to explore the business of SEM from owners' perspectives. Jupiter Research's Chris Elwell guided the exposition with several searching questions of his own. If you missed it, the track is slated for next month's Search Engine Strategies in San Jose, with insights from a new round of industry leaders.
"I feel like I've found my tribe," grinned iProspect founder Fredrick Marckini. "In all my years of speaking on SEO, this is the first time in the history of iProspect that I have been invited to speak about growing a business instead of on how to attain top rankings in search engines."
Good people are the key to success
Clearly top of mind is attracting and retaining talented people. "Turn over is outrageously expensive," said Marckini, who pointed out that in a service business, your primary company assets walk out the door each night to go home to their families.
"We never require employees to move to Cleveland," quipped Lustina. "Since 1999 only one employee has left Intrapromote. "Ask yourself: is this a company I would like to work for?" he said. "The industry is growing and so is poaching."
Lifting up one truth "Employees quit managers, not companies," Marckini described his company's rigorous hiring process that includes seven interviews, based on "striver" characteristics iProspect has identified as indications of a successful employee in a particular role. "Every time we deviate from our hiring process we regret it," he remarked.
"It's almost scary how human beings have become commodities," added Pingel. With more money getting thrown around, there's a lot more at stake. "Is there still joy in this industry?" she wondered.
Growing pains are universal
Growth pressures rank high in the sleep deprivation sweeps, too. Lustina pondered the commitment to the same level of growth. "One of the things that forces you to grow is the very nature of sites adding new pages -- in other words keeping up with clients' growth." "Growth is imperative," added Pingel. "If you do your job well and clients are pleased, you'll get new business." Further, commented Marckini, "if you don't grow, there is no opportunity for your staff to advance in their careers which could cause them to leave to seek better opportunities."
Managing and growing in the shifting sands of still-evolving acquisitions increases challenges for business owners. Besides the lack of competition among media vendors caused by consolidation, Pingel worried about vertical integration, citing Avenue A-Go Toast, and Yahoo's acquisition of Inktomi "One day our suppliers become our competitors; how do we as a company fit into that landscape?" she asked.
Choosing the right clients
Learning when to say "no" proved a key transition for these leaders. "In the beginning you grow by saying 'yes' to everything -- but as you grow your success will be determined by how often you say 'no,' to opportunities and focus on your core business," according to Marckini. "You need to understand who the right clients are." Filter out those who don't value the web, have unrealistic expectations, or who abuse your staff. "Unhappy employees lead to turnover. Keeping you client filters 'on' tells your employees 'my company does care about me and my mental health more than the dollar'."
"Unbearable clients eat up so much time and resources," agreed Lustina. Pingel added, "It all comes down to client education. Maintain ownership of the process, so you're not forcing employees into uncomfortable positions."
Each of the three panelists named the most difficult challenge they faced in growing their business.
Marckini: How hard it was to transition from the "you da man" solo stage of your business to letting go of the burden to employees and finally delegating, "in essence, you get to a point where you think, 'if this team cannot pick up the ball and run with it we don't deserve to be a company.' You don't help people by lowering expectations, you help them by raising the bar and demonstrating that you believe they can meet the higher expectation."
Lustina: Human resources, especially interviewing and hiring. "It's taxing but worth it because the right person brings solutions to our company."
Pingel: Becoming so involved in lives on clients. "We want to make them look good and help them get promoted in their companies."
Business tips for search marketers
Partnering with ad agencies buys entry into brands and significant revenue, but no agency outsources forever. Lustina: "You're giving them a head start on deliverables. Realize that is what is happening and get paid well for it."
However, do everything you can to maintain direct relationship with your client. Elwell: "Don't let anyone else take control of that if you can help it."
Get an advisory board to ask the hard business questions. Pingel: "This has taken us so much higher; really turned the light on for us."
Consider putting an accountant and/or attorney on staff. Lustina: "Just having someone you can throw a question to and have it immediately answered" is very valuable.
Marckini: Your in-house accountant or lawyer learns your business as opposed to just thinking about it once in a while when a contract needs to be negotiated.
Focus on your core competency. Pingel: "Don't get spread so thin that instead of brilliant, you'd be average."