• by Steve Baldwin , December 15, 2008

Aaron Goldman did the SEM world a big service when he discussed the degree to which the "buzz" of search industry insiders swings wildly from conference to conference.  It seems that the ostensible leaders of this industry either have the attention span of gnats, or are so enormously influenced by the obsessions of the day that they are incapable of agreeing on a consistent agenda. This is especially remarkable, given that the agenda of marketers -- the people who pay Google's bills -- is as consistent from year to year as the Rock of Gibraltar, and can best be summed up by the question "How the heck can I stay in business when the search engines are sucking out all of my profit?"

So I commend Aaron for highlighting the notorious lack of consensus in this industry. I do, however, have a sizable bone to pick with him because comments in his article thoroughly dismissed the recent "buzz" about bid management as being inappropriate. What, Aaron asks, can possibly be buzz-worthy about bid management, which is just a "commoditized piece of our business?" In my view (and yes, I work for a company providing bid management services), this statement is completely wrong-headed, and reinforces a dangerous myth about SEM agencies, which is that there are few meaningful differences among them.

Commodities, of course, are undifferentiated products like crude oil or soybeans. They're sold by the pound or the bushel and are more or less the same. Later on, of course, after crude oil has been refined into gasoline or soybeans transformed into a myriad of processed foods, their differentiating features begin to appear, and people are willing to pay more or less for these refinements.

If all SEM agencies (which provide bid management as well as other services, some related to PPC, some not) used exactly the same set of software tools to provide bid management services, Goldman might have a case. But this isn't the way that SEM agencies operate. Yes, it's true that some large ad agencies providing search as a mere accommodation to their clients do license the same set of off-the-shelf bid management tools. But this cookie-cutter approach to bid management reveals more about the short-sightedness of the ad agency's senior management than it does the actual presence or lack of differentiating features among bid management systems.

Bid management systems are differentiable by so many factors that it's almost ridiculous that I have to enumerate them here. These differences aren't just academic or theoretical, but have a material impact on whether one's search campaign succeeds or fails. Here are just a few of them:

1. How often does bid management system update bids? Some bid management platforms update bids once a day. Others work in real time. Obviously, systems offering the latter capability are vastly preferable when attempting to manage bids in a dynamic auction environment, especially in business verticals where the competition is fierce.

2. How customizable is the bid management system? Search marketers each have different business models and success metrics. Can the system be customized to meet each's unique needs? Obviously, it's a lot easier to perform this customization when you own the technology, instead of licensing a cookie-cutter tool from a third party.

3. How reactive is the bid management system to instantaneous changes in traffic and conversions? Does it perform in-course corrections tied to changes in order volume, or simply gather these results and dump them in a report that's gone over by a human the next day?

These are just some of the meaningful differences that SEM agency prospects need to know about the all-important technical backbones powering the agencies they seek to do business with. There are others, but I think I've made my point. There are good bid management systems, mediocre ones, and truly bad ones, and they have a hugely material effect on your success or failure in search. Likening such systems to commodities is just as absurd as saying that a painting by your mother-in-law and a painting by Monet are equally meritorious, just because the canvases they're painted on happen to be the same size.

Editor's Note: Want to see (and hear) firsthand what happened at the Search Insider Summit? Click here for video coverage. And now, click here for the first videos from the Email Insider Summit.