A company called X+1 released a study
last week that highlighted the pain felt by many buying keywords from Google
and the other engines. Satisfaction with the performance of their companies' SEM campaigns was egregiously poor: on a scale of 1 to 7, only 12% of respondents gave SEM a top-ranked 7, with 57% ranking
SEM a 1 or a 2. Performance satisfaction with fairly simple search campaigns (30 to 100 keywords pointing to customized landing pages) didn't do any better: a full 42% reported being either
"dissatisfied" or "very dissatisfied."
The study didn't really explore what these marketers were doing wrong, but contained a few clues worth mentioning. About 60% of survey respondents
were doing SEM in-house. I'm not going to say that it's impossible to conduct competitive SEM campaigns in-house, and I'd need to know a lot more about the level of automation and staff experience of
such in-house teams before laying blame, but it's still a warning sign. Another cause for concern: key SEM decisions were often made by fairly low-level people, including analysts (48%),
strategy/results people (45%) and implementer/tacticians (36%). I'm not saying that these people aren't qualified to accomplish operational search tasks, but I must question their suitability for
high-level tasks such as procuring a suitable SEM agency.
Disappointment over SEM's performance didn't seem to dampen these marketers' willingness to lay out more money in the months
ahead. Most (65%) of survey respondents reported that they were planning either to spend the same amount of money in 2009 that they spent last year, with a handful (13%) planning to spend 20% more.
I'd hate to think that this is a case of "throwing good money after bad" but one must hope that the survey respondents are taking active steps to reform their operations before handing the search
engines even more money.
Unfortunately, there's no magic bullet for all the dissatisfaction. SEM agencies (and yes, I work for a SEM agency) will likely use this data to hammer companies
that continue to do SEM tasks in-house, promising to ride to the rescue. Unfortunately, the reputation of many SEM agencies isn't exactly stellar; otherwise "agency churn" wouldn't be as high as it
is. Sadly, there are situations in which agencies have done a far worse job with search tasks than a qualified in-house team. Spending more to better train in-house search teams and equip them with an
appropriate level of automation will help some, but such investments are difficult to justify in a recession, and the fear that one's best-trained people will up and leave when the economy improves is
If there's one sure cure for avoiding disappointment, it's to manage your expectations correctly. Paid search is an exceptionally difficult marketing medium to master,
despite the perception (promoted by the search engines) that it's a self-serve, plug-and-play road to profits. Here, failure isn't just an option: it's practically guaranteed for the unwary and the
unequipped. Buyers must always be wary, whether they're buying keywords, staffing in-house teams, or shopping for SEM agencies. The good news is that if you approach this medium with fear, respect,
caution, and a first-rate, executable plan, you just might wind up being happy with your results.
Steve- could you elaborate what you mean by "the level of automation" when you talk about conducting SEM in-house?
As a person who has been managing SEM accounts since a company called GoTo.com first invented pay per click search results, what I have seen is a severe erosion in the cost effectiveness of SEM.
While you touched on the search engines' role in all of this, Steve, I think you are letting them off quite easily. They are all under pressure to increase advertising profits and in the process they have implemented processes geared to maximize clicks with decreasing concern for the quality of the traffic that might come from them.
For example, Google's broad match has become so broad that ads are shown on search terms that barely resemble the keyword one is bidding on. While there are many tools one can use to control this, including avoiding broad match all together, it takes a lot of time, effort and almost psychic abilities to optimize a campaign for CPA or ROI. And when the Yahoo team starts creating ads that you never authorized based on no knowledge of your business whatsoever, it really makes one long for the good old days when you paid 5 cents per click and got your money's worth.
Miki Dzugan, Rapport Online Inc
Setting expectations is much harder with SEM than traditional marketing. I think it's because online marketing is almost too measurable, too accountable, & too transparent. **I now know how Obama feels**
Compare $5K spent on the web vs. a billboard on the side of the highway. Because the billboard has little data, it can't get the scrutiny. The CEO drives by it every morning to get his ego boost. No questions are asked, but no ROI expectations are achieved either.
Online ads get scrutinized because clients DO see all the impressions, clicks, and ROI it produces. Mix this with a lack of general knowledge about how the internets actually works & anyone can find holes to poke at.
This is the reason I think many are "upset", yet are sticking to online marketing. They at least know its making them money. They are just unhappy they can squeeze more out of a dollar – especially with the economy today.
Each year I get more people to understand that the web is not a place full of magic dust, unicorns, & wizards. It’s just like other marketing, only more flexible and more accountable – how can anyone hate on that?
I would have to agree Miki, as I've experienced the same going back to my GoTo.com days. I don't think reading into this study about what people are doing wrong is the right approach. Nobody is doing anything wrong, they are just be tougher in their evaluations of success.
The advertiser dissatisfaction here is a result of them finally waking up and smelling the coffee in tough economic times. Senior Execs are now scutinizing every expenditure and the managers can no longer gloss over results with branded search terms included in the mix to buffer performance. Search engine marketing campaigns are becoming increasingly less productive and have so for some time now. Advertisers are now evaluating non-brand terms separately and as a result are less thrilled with performance.
What this analysis from X+1 does is send a signal to Google, Yahoo and MSN that the honeymoon is over and that they better start focusing on advertising effectiveness ASAP.