• by Ross Fadner , August 5, 2004

Trade journalists like myself are usually on the periphery of what goes on internally at the companies we cover on a day-to-day basis. Sure, we have our spies and our off-the-record discussions with sources, but for the most part, our task is to identify and write about trends, break news, and turn PR spin into news.

Last week, at the Jupiter Media Advertising Forum in New York, I had the rare opportunity of having several face-to-face, off-the-record discussions with many of the same industry analysts and professionals I speak with by phone on a regular basis. And I have to say I was surprised to hear an awful lot of negative talk about interactive agencies' comprehension of the different channels they develop advertising for-especially search. More than one analyst told me that agencies are adrift when it comes to understanding various marketing channels.

That agencies struggle with search is nothing new, but I was completely unaware of how contentious the relationship between some agencies and search engine marketing (SEM) firms had become. It's become problematic to the point where a bunch of panelists who were supposed to speak about search engine optimization (SEO) and campaign management took it upon themselves to shift the panel's focus to something more like, "Agencies: Old and in the Way."

Wahlstrom Interactive's Kevin Ryan kicked off the debate with a series of sound bites from an unnamed CEO of a top-5, SEM firm, the most pointed of which flatly stated: "Agencies don't get it. They just don't get it, and they never will."

Ryan proceeded to point out that agencies regard SEM firms as a necessary evil, but one that demands too big a chunk from an already limited media budget. He said that SEM firms think of the agency as something of an anachronism in the search market, sort of like a union member that gets his cut simply because a quota demands that he show up and be paid.

Dana Todd, co-founder of SEM firm SiteLab, said that this out-of-place feeling gives agencies something of an inferiority complex when it comes to SEM and SEO. They want to feel like they hold dominion over the entire campaign, and that outside firms are mere facilitators of that process. But Todd argued the reality is that the agency gets in the way of a campaign by unconsciously trying to over-exert its authority. "You can't control what you don't understand," she said.

Another frustration point is that there isn't much to ordinary text ads. They're short and direct, and only require slight tweaking for different keywords. In other words, there isn't much to the creative process, so what exactly is the agency's role in SEM?

At an earlier panel, aptly titled "Where Do Agencies Fit In?," Carat Interactive president and CEO, Sarah Fay, admitted that there is definitely an element of "co-opetition" between ad shops and their third-party partners. She said that Carat Interactive views the agency's role "as more of a strategist/consultant."

But one wonders how effective an agency can be in that role, especially with regard to search. After all, isn't strategy and consulting one of the key services agencies look to SEM and SEO firms to provide?

The overwhelming sense I received from these panelists and other people I spoke to is that agencies and SEM firms are on a collision course unless the Search Engine Marketers Professional Organization or the Interactive Advertising Bureau steps in to sort out roles and maybe even standardize fee structures, a major flash point between the two parties. Clients are also in need of basic education on search, both with regard to the search process and the rising tensions between the "collaborating" parties that are forced to fight over shared commissions.