SEM Agency Selection: Brilliance or BS?

Hiring an SEM (define) agency or selecting a campaign management technology for in-house use is confusing. I hear about this topic all the time and can often determine, based on the questions the marketer asks, which vendor’s sales team has been talking to the marketer most recently. It’s actually gotten fun to reply, “So what other questions do you have, based on what [insert appropriate SEM vendor or technology platform here] has said about campaign [or bid] management?”

SEM agency and bid management vendors strive to differentiate themselves, particularly when speaking to senior marketing VPs or CMOs who don’t have the intimate knowledge of paid placement SEM as readers of this column. The need to differentiate has driven many vendors to the point where they have no choice but to create buzzwords to describe their approach, techniques, philosophy, or unique formulae. Marketers must understand exactly what they’re buying (or being sold). To accomplish this, they must separate the buzz from the blather, and the brilliance from the BS for each SEM or technology vendor.

Identifying brilliance and knowing when you’re being fed a line isn’t always an easy task. The SEM landscape is complex. Search engines introduce new targeting features almost monthly, along with changes in how the bid landscape operates. Add to these new inventory opportunities, such as contextual and behavioral site-specific targeting, and it becomes even more difficult for advertisers to choose among the formulae, SEM tools, and technologies presented.

Many marketers turn to professional research groups, such as JupiterResearch, or publishers that compile SEM guides, such as ClickZ, for help. Jupiter’s “Search Engine Marketing Agency Constellation” report is always interesting (if you subscribe to JupiterResearch or can look over the shoulder of someone who does). The report is available as a standalone purchase for $3,000, so if you’re a serious search marketer and don’t subscribe to JupiterResearch, it may still be worth buying the report.

One interesting dynamic in the report comes from participant changes between the first report in 2004 and the latest 2006 version. Several SEM agencies either chose not to participate this year because repercussions of a bad rating can be severe or perhaps weren’t selected to participate in the survey (the research company won’t say).

Over the last couple years, some buzzwords have been particularly sticky and crop up more often in SEM agency sales pitches. In particular, we hear “portfolio,” “predictive modeling,” and “rules-based bidding.” In the end, all vendors use some set of formulae and a combination of math and science to manage bids.

Some SEM agencies like to sell portfolios or a portfolio-style campaign management technique as something mystical or magical. In truth, it’s just math; all campaigns and bids are managed on math (even those you manage manually). By necessity, all decisions made about bids (individually and in groups or portfolios) are based on some kind of formula. Even the engines are getting into the act with bid management. Based on a demo at the last Search Engine Strategies, Yahoo’s Panama will even manage bids if you want to enable certain settings.

Results Matter

Some formulae are killer, especially when combined with a smart team and sound strategies. Others will fail, taking a campaign to a sinking plateau (the plateau sinks because your competition innovates and improves around you). Predictive models can be useful. But like the stock market, historical data don’t always predict future behavior or results. Some formulae don’t adequately take the unpredictability and volatility of certain keywords into account. There can be smarter and simple (dumber) portfolios. The addition of non-bid parameters into the equation (CTR (define) and fuzzy quality scores) make it more challenging for formula developers to adapt and consistently deliver the best formula or AI decision engine.

Buzzwords such as “smart portfolios” and “predictive models” are really just marketing-speak. I’ve found one formula that doesn’t lend itself to being reduced to a buzzword: a flexible AI that can test different formulae coupled with a team of analysts who can adjust formulae and campaigns. This consistently outperforms a one-size-fits-all formula (not that anyone out there uses anything so inflexible).

As the engines continue to change the way they calculate predicted CTR, ad relevance, and eCPM (define) or yield, those of us tuning and tweaking formulae must stay on our toes. None of us have the opportunity to peek behind the curtain of all the campaign management systems to see how smart or dumb they are.

Regardless of what technology you choose to use to run your campaign, make sure the math makes sense for you, your business, and your industry sector. Make sure you or the team using the technology is smart and understands your objectives. A smart search professional with the most rudimentary technology will probably beat the best technology when that technology is implemented by a moron.

Equally important for all search and online marketers to remember is it’s not only about buying the right clicks at the right price at the right time. Successful campaigns also send those clicks to the right landing pages, maximizing relevance and user experience. Google’s even started rewarding landing page relevance, which helps marketers and consumers alike.

When it comes time to evaluate SEM vendors and technologies, don’t select vendors based on buzzwords alone. All SEM vendors use them; I’ve been guilty of using a few buzzwords myself. Peel back the layers and make sure you understand exactly what each vendor or technology will deliver beyond the voodoo.

Join us for Search Engine Strategies Local in Denver, CO, September28, at the Adam’s Mark Hotel.

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

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