A new study sheds light on the performance of SEM (define) firms, concluding many firms are missing opportunities and failing to provide important services for their clients.
The study, a joint effort between Jupiter Research and iProspect, surveyed 636 qualified search marketers and 224 search agencies, probing for specific practices and methods used in the overall SEM process. iProspect released the findings in a series of three reports.
The first report, the “iProspect Search Marketer Performance Study,” looks at how SEM firms evaluate employee performance. Though over 80 percent of all firms reported they evaluated employee performance using some metric, most looked at measures such as Web site traffic or search engine rankings rather than business results, such as ROI (define) and total sales generated from search engine leads.
Specifically, only 4 in 10 search engine marketers are evaluated on ROI or total sales generated by their SEM efforts, and just under 20 percent are evaluated on offline results generated by their SEM efforts.
Although many overall SEM campaigns are evaluated using more sophisticated business-related metrics, individuals responsible for those campaigns aren’t held to similar standards.
It’s important to remember most SEM firms are comparatively small organizations and may lack the formal processes or bureaucracy that can support employee performance evaluations. Employees at smaller firms may have other job responsibilities in addition to SEM. Performance evaluations have a relatively low priority compared to other activities in smaller firms.
The study notes larger firms, with more resources and established policies and procedures, are more inclined to tie SEM campaign ROI to employee performance.
The second report, the “iProspect Outsourced SEO Metrics & ROI Study,” looks at search marketers who outsourced natural SEO (define) to an SEM firm and participated in a paid search advertising campaign. Participants were asked to rate the comparative ROI from each approach.
Surprisingly, only one of seven search marketers measure overall ROI of their combined SEO and PPC (define) campaigns. Most cannot even separate the individual ROI of the two different channels.
Another surprise was that 35 percent said algorithmic SEO produces higher ROI than search ads. Just 11 percent said SEO produces lower ROI than search advertising. Fully 45 percent said they cannot determine whether SEO or PPC provides a higher ROI.
This suggests that despite the popularity of PPC campaigns, natural SEO remains highly effective and shouldn’t be neglected by anyone wanting maximum exposure and ROI from their SEM efforts.
The final report, the “iProspect Natural SEO Outsourcing Study,” seeks to understand the obstacles preventing firms from implementing natural SEO strategies recommended by their SEM vendors. In other words, if you pay for SEO advice, why don’t you use it?
Just over a third of respondents said there were no obstacles to implementing SEO. However, 64 percent of organizations outsourcing natural SEO to an SEM firm encountered obstacles within their own organizations.
The two biggest obstacles were lack of human resources to implement changes (34 percent) and lack of outsourced IT budget (17 percent). This suggests if a company lacks human resources to implement changes or a budget to outsource them, it’s not well served by its current SEM firm.
A Useful, But Not Bleak, Industry Snapshot
Each report provides much more detailed findings and is well worth a read. In aggregate, they offer a industry snapshot showing some seemingly glaring problems that should be of concern to SEM firm clients. They also offer valuable lessons to search marketers on how to improve their own work processes.
If you outsource SEM, ask your SEO firm some of the questions posed in the study: How do you measure results? How do I know if your efforts are returning more than they cost? Which techniques are most effective? These are legitimate questions any competent SEM firm should be able to answer readily.
Remember, SEM is one of the few types of marketing where this type of measurement is possible. It’s certainly not possible to apply similar metrics to most traditional advertising or marketing efforts. They lack the hard data available to search marketers.
Also, take the conclusions with a grain of salt. Yes, the SEM industry has some problems, and larger agencies with more established procedures are often be more accountable. But the industry is still relatively young, and most of us are learning as we go, continually improving the techniques and processes we employ. Expect that trend to continue, and for smart search marketers to absorb the studies’ findings and use them to improve their own processes.
Meet Chris at Search Engine Strategies in Chicago, December 5-8, 2005.
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