In-House vs. Outsourced SEM: The CMO’s Guide

Should marketers manage search in-house or outsource it? Conference sessions are devoted to this question, research analysts weigh in about it during briefings, and white papers have delved into it.

Some in the SEM (define) agency community and some in-house SEM practitioners are engaged in a war of words over this point. Complicating the picture: campaign-enhancing technology, including bid management, landing-page testing, click segmentation systems, and supporting Web analytics.

Perhaps each side is solidifying its career prospects. Reality lies far from the rhetoric presumably aimed at CMO, marketing VPs, and the executive suite in general. After all, the livelihood of both in-house and agency SEM practitioners depends on what the executive decision-makers believe to be the optimal scheme.

What are the merits of outsourcing SEM compared to those of managing SEM (both PPC (define) search and SEO (define)) in-house? The answer depends on multiple factors that must be evaluated before selecting a strategy.

Even the definition of “outsourced SEM” can vary. For example, my team services some clients who believe they aren’t outsourcing search because the partnership keeps certain roles and responsibilities on the client side, even though my team provides more than technology and tech support. Other clients receiving the same level of service consider that arrangement to be outsourcing. It’s more important for marketing executives to determine the specific needs and campaign objectives, then decide how best to achieve those goals.

The search marketing industry is barely a dozen years old. CMOs should consider other key business processes, such as legal and accounting functions, that are carried out in-house or by outside firms. Large corporations and even some midsize entities have in-house counsel but still rely on outside law firms, particularly when special external skills and knowledge best serve the enterprise. Likewise, managing accounting functions in-house doesn’t preclude the use of an external accounting firm. Within marketing, the same continuum exists for traditional advertising and public relations.

A CMO must determine the balance of skills and expertise required to accomplish search marketing objectives. This may include whether to retain a combination of in-house staff and external expertise, such as production expertise, strategic experience, and analytical savvy.

As with legal and accounting services, an enterprise’s SEM needs may change over time. When a major lawsuit looms, even a well-staffed in-house legal department will generally call in reinforcements from outside. Within media and search marketing, factors influence the staff hours required to accomplish campaign objectives, including:

  • A campaign’s age
  • A campaign’s size, including engines, keywords, and segmentation groups
  • Competitiveness of an industry segment
  • Speed at which the search engines make changes to their offerings, including algorithms and types of media
  • Frequency of change in product/service mix
  • Seasonality of an industry
  • Current employee team size
  • Current employee team skills mix and level of experience
  • Likelihood of employee turnover, driven by a shortage of SEM experience in the marketplace
  • Changing technology needs
  • Level of aggressiveness and willingness to test
  • At times in the campaign lifecycle, there may be significant opportunities that can only be captured by deploying significant production resources, uncovering knowledge through careful statistical analysis, or applying expertise. To build an in-house team for every stage of a campaign isn’t optimal. Even the staunchest in-house SEM advocate, then, may miss huge opportunities and should consider a partnership during a campaign.

    Within paid search, exchange-traded (auctioned) media presents another important factor in determining the enabling technology’s fit. Technology decisions occur within a “build vs. buy” continuum, as do the services and expertise side of search. Technology can do more than automate mundane aspects of real-time auction media marketplaces. In some cases, it can be more effective than human effort alone. Yet technology poses challenges depending on the amount of customization and training required.

    One challenge is the technology’s level of customizability and its power are often correlated with the level of training required to fully tap its capabilities, making the level of support from your technology vendor particularly important. Bells and whistles you’ll never use are worse than worthless and clutter the user experience.

    If you’re a CMO or other senior executive overseeing search marketing, consider the point on the continuum between in-house and outsourced that will best serve your organization now and for the next 6 to 12 months. Then revisit that mix if you determine that you’re either missing profit/growth opportunities or overspending on services for your current needs.

    Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.

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