The symptoms of this malaise are everywhere: on trade show floors, where prospective clients, wary of getting yet another snake oil pitch, avoid SEM agency booths; in corporate corner offices, where CMOs, having been burned one too many times by an SEM agency, pound their fists in frustration; and even in the pages of online publications such as MediaPost, where industry spokespeople talk around the issue, refusing to face up to the crisis, as if to deny what's happening will make the problem magically go away.
This Crisis of Confidence is Real
What's happening is that the people who make search spending decisions really don't trust any of us anymore. More and more of them are taking the fateful step of bringing their search campaigns in-house, even though there are about a million reasons why an in-house team will never outperform a competent search specialist firm. Things are so bad that CMOs have actually said that "I trust Google to manage my search campaigns better than any SEM agency I've tried."
You can argue all you want that saying something like this is equivalent to saying that the IRS will do a better job of doing your taxes for you than your accountant will, but you can't argue with that CMO's experience. That's the problem that we in the SEM agency business face today: people don't think we add value anymore; they've been burned too many times and have already taken steps to hire in-house people managing search with gosh-only-knows what skills and tools. And make no mistake; these internal hires aren't going away anytime soon (especially in a retrenching job market). They'll fight tooth and nail to justify their jobs, will find any reason in the world to reject the outsourcing solution, and as long as they know slightly more about search than the bosses who hired them, will probably succeed in hanging on, despite the damage to their firm's bottom line. In a pinch, they can always pass the buck by blaming Google when their campaigns go into the red.
How Did We Get Into This Mess?
I work for an SEM agency and it would be highly disingenuous for me to do any partisan finger-pointing at my firm's competitors. Instead, let me stick to the general issues responsible for the current malaise. These include:
Ridiculously low/nonexistent barriers to entry. Anybody and his mother-in-law can become an SEM agency today. There's no meaningful certification system, no licensing requirements, and no neutral third parties out there separating the good guys from the fly-by-nights. The result is that everybody in the SEM business must continually try to prove that they're not crooks and charlatans, instead of selling their value proposition.
Search is perceived as an undifferentiated commodity business. In the good old days of Madison Avenue, it was easy enough to distinguish crappy ads from great ads, because the results were right in your face. In search, the only way you can prove your worth is by showing the profit you've generated for another client, but every business is different, competitive environments are dynamic, and clients don't like to disclose their success stories (because they don't want to tip off their competitors about what they're doing). The result is that it's almost impossible to demonstrate a value proposition, which reinforces the perception that "all SEM agencies are the same."
Search engines are indifferent to industry plight. You'd think that Google et al would want to do more to discourage the kind of blind, uninformed search spending that is endemic today, but they're completely AWOL on this issue. After all, they make money with every click, whether or not it leads to a conversion. But search engines will sooner or later wake up to the fact that the mere fact that they post copious Help Files about best practices isn't the same thing as functioning as real partners. Until the day that a Google message pops up that says "Hey, buddy, do you really want to buy that click? it's worthless!" before debiting an account, this situation won't improve, and nobody's expecting this kind of error message anytime soon.
What Can Be Done?
There's only one way to dig ourselves out of the hole this industry's in before it becomes a grave. SEM agencies need to step up the plate and start putting their money where their mouths are. Yes, our industry is young -- but we can't just talk reform, we've got to start reforming the way we actually do business.
One idea being floated is for SEM agencies to start actually insuring their clients against the kind of catastrophic losses that can occur when these agencies drop the ball. This idea is unprecedented in the annals of advertising and right now, it's just talk, but my bet is that you're going to hear a lot more about it in the next few months, because it makes so much sense. After all, we agencies do very well when we do a good job for our clients. Doesn't it make sense for us to stand with them and offer them relief when, for whatever reason (either internal or external), things turn stormy?