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February 10, 2009

SEM Is A Service, Not A Product

Fellow search insider columnist Aaron Goldman and I have been batting at the RFP pinata for the past few weeks, because our view is that using RFPs to select SEM agencies clearly doesn’t work very well, either on the client or the agency side.

Unfortunately, I am doubtful that our modest reforms to the procurement process will be widely embraced, because of a particularly widespread misperception about what SEM agencies do. This misperception is that SEM agencies are suppliers of a product, not a service. This distinction isn’t just an academic one: let me explain why I believe why it’s so damaging.

Late last year, Didit, the SEM firm I work for, took on a new client’s PPC account from another, generally well-regarded SEM agency. Upon looking over the state of the client’s account, our client services team was appalled by what were a number of jarring pre-existing errors, including all keywords set to broad match, plus the complete absence of negative keywords. These errors of omission supported the prior complaints from the client that “our old agency didn’t do anything.”

The reason I mention this anecdote isn’t to bash a competitor. What I’m trying to get at is the question of why SEM agencies, for whatever reasons, in certain cases either “do nothing” or are perceived as “doing nothing.” And the answer, sadly enough, is that in many cases it’s not because they don’t want to do the work, or that they don’t know how, but because they simply can’t afford to do it at all. Tasks such as testing and implementing keyword match types or enumerating negative keywords aren’t rocket science-level tasks, but they’re labor-intensive, requiring the services of trained people, paid by the hour, who are compensated with money from the agency’s markup on media spend. SEM agencies, in other words, provide a service, not a product.

And yet SEM agencies providing such services are routinely pitted against each other by RFP-wielding clients in bidding wars in which the lowest-balling vendor gets the job. This would be OK if we all sold a similar commoditized product. But it’s a prescription for disaster if one is buying a service, because as we all know from life, there are wide variances in the quality of service you’re going to get from, say, a lawyer who’s just passed the bar and one who knows every judge on the bench.

Clients should realize that they’ll never get the level of work required by beating up any service provider on price. If you pay your lawyer half his fee, he’ll do half the work: this is simply the way the world works. When buying a service, you always get exactly what you pay for.

Agencies should realize that accepting a low-ball bid to win an RFP competition isn’t good for them either, because it ensures that such a relationship isn’t going to be happy in the long run. At worst, signing a client you can’t afford to support can unfortunately result in having one’s company reputation dragged through the mud by this same client at a later date.

We’re keen in this industry on being technologically focused, and that’s fine, because technology is in our DNA and clients need to know about how this technology works. But SEM is as much a people-centric discipline as it is one driven by machines. You might be able to buy a machine at a discount, but you’ll never be able to buy the discounted service of a true professional. Unless we are somehow able to move the conversation beyond price, we’re going to keep going round and round in the same unhappy dance. My fear is that we as an industry have been doing this dance for so long that it may be too late to change the music.

Steve Baldwin is editor-in-chief at Didit, an agency for search engine marketing and auctioned media management based in New York. You can reach Steve at steve.baldwin@didit.com.

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