• by joseph , Robert Murray , January 11, 2006

The second-ever Search Insider column was published on June 28, 2004, and was entitled "Five Reasons Why Ad Agencies Hate Search Engine Marketing". It was written by my colleague, John Tawadros, and today you'll find over 850 search results in Google that directly reference, or link to, that article. 

Well, it's now 18 months later.  Search has certainly evolved as a marketing channel during that time, and more traditional and interactive agencies than ever are providing some sort of search marketing services to their clients.  So I thought now might be an appropriate time to revisit a few key reasons why ad agencies STILL hate search marketing, and once again watch the fur fly on both sides of this topic.

Natural Search Results. According to JupiterResearch, 87 percent of commercial clicks on the major search engines take place on the natural (or "organic") results. Because online marketers are growing to realize this, demands are increasingly being placed on ad agencies to provide natural search engine optimization services for their clients.  Yet natural search results are much more difficult to produce than those generated by paid search marketing or other media buys. 

In fact, to effectively compete in the natural search results marketplace, service providers need two key components that most ad agencies cannot claim: 1) proprietary technologies that interpret search engine ranking algorithms and inform their search optimization strategies and  2) a mature optimization process that's been refined over hundreds of clients, across a variety of vertical industries and business models, that has addressed the broad spectrum of technical challenges that can be posed by client Web sites. Service providers who lack either of these components are at an extreme disadvantage in producing search engine rankings, traffic and conversions for their clients.

Pay-Per-Click Management. While pay-per-click (PPC) search advertising may be easier to set up and run--and therefore be much closer to ad agencies' "sweet spot" when it comes to their traditional media buying role--it is still not easy to run PPC campaigns effectively. And since John's article was published, the competitive environment within Google and Yahoo!'s paid search auctions has grown even more intense--due in no small part to the growing availability of automated bid management tools. 

The recent prevalence of these tools in the management of paid search marketing campaigns has resulted in the adoption one of two new options by most ad agencies: 1) to either manually manage clients' PPC campaigns, competing against campaigns being managed much more effectively by automated software programs; or 2) to learn, staff and utilize third-party automation to manage clients' campaigns, but share per-click fees with the supplier of the automation.  Neither option is ideal--and both require specialized training, along with the agency dedicating some number of man hours to campaign management. 

Pricing Pressure. A byproduct of the automated bid management tool revolution has been the continually decreasing fees that search engine marketing service providers (ad agencies and otherwise) can afford to charge for paid search campaign management.  This has provided an advantage to those service providers who own and utilize their own bid management tools, as opposed to those owned by a third party to whom an additional per-click fee must be paid. 

In fact, when you look at the tiny percentage of the paid search spend that many agencies are forced to accept as their fee for campaign management, the number of man hours the agency must dedicate to actually manage the campaign, and the per-click fees the agency has to pay the supplier of the bid management tools, there are most certainly agencies that are managing paid search as a "loss leader" simply in order to continue to be awarded their clients' other media buying business. How's that for a great reason to hate search?

Flip Side. In my next column I'll discuss the reasons ad agencies should LOVE search.  Stay tuned.