The Paid Search 'Core Competency' Myth

Recently, I heard an interesting bit of rhetoric from a small group of online marketers regarding the desire to fully in-source paid search because it has to be a “core competency.” When asked to further explain this desire or this strategy, marketers often talk about how their investors, CEO, or board of directors believe that because the entity is so dependent on Google in particular and search as a whole, that the tasks and strategies are far too important to outsource. Sometimes management as an entity even thinks the technology shouldn’t be outsourced and instead be built in-house.

If you or your organization believe that you “need” to manage paid search fully in-house because as an Internet savvy company, you must make search marketing a “core competency,” you may be doing both yourself and your company a disservice. After looking at hundreds of paid search campaigns, I’ve found that the best campaigns from both a structural and performance basis have both a strong in-house individual (or team, if a large marketer) and a skilled external agency or consultant. If the spend under management is large enough, then an appropriate campaign management technology also adds significant time savings and performance enhancement. To understand why this combination of internal and external human capital is superior to a fully in-sourced solution, let’s look at the strategic and tactical elements of running a great campaign.

First, let’s look at the strategic rationale for a fully in-sourced SEM department handling search strategy with their VPs or CMO. The argument is that search marketing strategy is best handled exclusively by a team intimately involved in the business. Clearly, someone at the advertiser needs to be aware of the strategic goals and the specific objectives for a search marketing campaign. However, sometimes more brains result in a better strategy. Think of all the marketing-centric companies you respect and love, and how heavily those companies rely on outside wisdom and talent for their strategy refinement. Pick your favorite soft drink or water company, cosmetics company (they are all about perception, branding, and marketing, and most of their revenue goes to advertising, not cost of goods), telecommunications company, offline retailer, consumer packaged goods company, auto company, etc. It’s very rare for these major marketers not to use an agency, or more than one agency, to advise on brand strategy and marketing strategy. Often, in addition to an agency, they will hire an Accenture or McKinsey.

Generally, when an advertiser hires an search marketing agency for some combination of tactical and strategic work, the incremental strategic value is part of that bundle. However, an even stronger argument for a strong internal and external team working on search marketing campaigns can be made at the tactical and operational level. Let’s look at the day-to-day challenges and tasks that an individual or team managing an search marketing campaign face.

• Scalability of production tasks: The homework assignments for most search campaigns are never-ending. Sometimes an account reorganization, keyword expansion, or landing page review can take hundreds of man-hours. If purely internal resources are used, these tasks can get postponed, resulting in opportunity profit costs of thousands or hundreds of thousands of dollars. Agencies can often deploy large production teams on a task that would burden an in-house team.
• Ability to focus on conversion-enhancement and optimization: Often what holds a campaign back is the site, the offers, the landing pages, and the flow. Rather than focusing on keywords, creative, and bids, having an agency working with you will enable the improvements in efficiency that drive profitability and scale.
• The benefit of automation: Not only do agency teams have processes for all the labor intensive tasks, they may (should) be using technologies that make them more efficient, including bid management and campaign management platforms.
• Clout with the search engines: Many agencies manage millions of dollars of spend a month and have not only a high service level, but also the ability to rapidly escalate problems to high levels within the search engines, resulting in faster resolution and better outcomes.
• Access to beta programs for the search engines: Often agencies get an early opportunity to try new products.
• Best-practices sharing: Agency teams (if the agency is run correctly) learn from each other and from the fact that each team has more than one client. There’s a certain wisdom that accumulates within teams.
• Information risk: You may be the in-house SEM person. Are you going to work at your current company forever? By partnering with an agency, not only are you letting them make you look like a hero when the results improve, but you also do what’s right for your employer. Plus, you are now a manager. If you are senior management reading this, consider what happens when all the information about your campaigns that hasn’t been documented walks out the door. An agency is a bit of insurance.

Along with all these benefits, having agencies work with an internal team means the team has personal insurance too. The agency has ultimate accountability for the campaign. Search marketers have to learn what the top advertisers in the world for offline advertising have learned many times over. Agencies can be an extension of an internal team, making them better.