Moving Toward Rational SEM Agency Procurement

George Michie, who works for SEM agency Rimm-Kaufman, made an excellent point last week in an article about SEM agency procurement policies. (See: ) He pointed out that choosing an SEM agency is more like choosing a professional service company such as a law or engineering firm than a traditional advertising agency or other "creative" company.

Michie's article was important because SEM agency procurement processes are broken, and the result hurts everybody in the search business. Clients suffer when agencies cannot meet RFP-dictated expectations and good agencies whose value propositions aren't obviously revealed by the RFP checklist are frozen out of the eligibility pool. Even worse, the whole industry suffers from what I call SABC (Spurned Agency/Burned Client) Syndrome, a rash-like malady causing client and agency to not only part ways, but grouse for months about how rotten their experience was with each other.

The multi-page, checklist-oriented RFP process only persists because too many companies believe that SEM agencies are "just another technology vendor" that can be evaluated like a vendor of copier machines or coffee. And maybe we in the agency business bear much of the blame for letting this misperception go unanswered. After all, if the way we present our firms is limited to talking about minutiae relating to bid management, long-tail mining, or other arcana, we're marginalizing our value proposition and commodifying ourselves. If we want to be taken seriously as real partners in our clients' growth, we should drop our geeky jargon and focus on a much higher-level conversation that focuses not on rankings or short-term ROI, but on what we can do to improve our clients' market share and long-term growth.

Unfortunately, we're rarely allowed the opportunity to have this conversation, because the SEM agency procurement process is usually delegated down to personnel (typically an in-house search manager). This person was typically chosen to do his/her job because of deep tactical expertise, not strategic insight or business acumen, and consequently crafts the RFP to stress granular issues. In effect, he or she "cannot see the forest for the trees." (Note: I have nothing against in-house search geeks and their tactical knowledge, so please hold off on the comment flames. I am only saying that they should stick to what they do best (managing search teams), and not be entrusted with tasks for which they have no training (e.g., agency procurement decisions)).

To choose wisely, one must look beyond a purely algorithmic approach to choosing a SEM agency via the RFP. Procurement decisions about search agencies should occur at a senior management level, because the consequences of a poor choice can have such a negative impact on any enterprise's bottom line. Choosing a lawyer to fight a crucial lawsuit or an engineer to build a new bridge are decisions made at the C-level. You wouldn't send out an RFP for that all-important engagement. Why should SEM agency selection issues be treated with a lower level of due diligence?

Michie's article -- and I really do hope that a lot of people read it -- proposes a series of more meaningful indicators of an SEM agency's fitness to task. I won't reprise his list here, but will just add a few points supporting it. First, clients should pay close attention to an agency's length of time in business, given the low barriers to entry in this business. Secondly, they should focus on the agency's degree of client spend growth over time. Obviously, failing to grow client spend is a warning sign. Finally, take a look at the total spend under agency management. Competence in managing large spend accounts is a fairly reliable indicator of an agency's ability to provide the kind of extensive client services typically required by such clients. Knowing these three facts alone will, in my view, provide a much better indication of fitness than knowing how many times a day an agency's software changes bids



3 comments about "Moving Toward Rational SEM Agency Procurement ".
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  1. Scott Macdonell from LegalZoom, January 26, 2009 at 1:09 p.m.

    Here's the problem: you all (SEMs) say the same thing. I know it must feel unique when you're saying it. But trust me, you could have one powerpoint between the top 10 SEMs and just swap out the logo and do a find/replace on the name of the company. It would save everyone a lot of time. In fact, I could do the pitch right now without any other prep. I've heard it enough.

    So while I agree with you that the RFP isn't everything, I do believe that an RFP, or something like it, is important. Where else would you learn about the security of your data, uptime, pricing models, SLAs, proposed team structure, and address issues that you feel are important such as total spend under management and client spend growth? There has to be some semblance of apples-to-apples comparisons across Agencies. It's also nice to revisit the winner-RFP once the engagement has commenced to hold the Agency accountable to what they proposed.

    Now, to your point, the Client has to do a lot of other work: visit finalists in person, ask around, take a look at the Forrester/Jupiter research, talk to the referral list (and also find Clients that left the Agency in question and find out why).

    But making a decision merely based on ROI *conversations* with smart people would be foolhardy. Just ask Bernard Madoff's clients.

  2. David Wilson from AMN Healthcare, January 26, 2009 at 1:30 p.m.

    This is yet another self-serving article by DidIt. At least with Kevin Lee, his articles give some insight beyond why we should choose your services. Of course you don't want your services to be evaluated by someone who actually understands search marketing, you'd much rather avoid lower tier, tactical managers who might be able to ask pointed questions in response to your presentations. Once you get the account, it would also be best to operate in a black box, and just report top line results. As long as you can dress up the numbers so they look pretty, you must be operating the campaigns as efficiently as possible. Did you know the word "gullible" cannot be found in the dictionary? Do us a favor and stop writing thinly veiled articles that are entirely self-serving and misleading. I suppose you would recommend that a web analytics vendor should also be chosen by someone who has never logged into web analytics program?

  3. Marc Engelsman from Digital Brand Expressions, January 27, 2009 at 10:55 a.m.

    On the one hand, Steve, you are right that RFPs tend to be vendor-mentality oriented and are not necessarily the best tool for evaluating search marketing firms. This is even more true with optimization services vs. paid search.

    On the other hand, your evaluation criteria plays right into the use of RFPs, and not to pile on here but, is incredibly self-serving. Number of years in business does not necessarily equate to expertise. Growing client spend is not always in their best interest and certainly not an indicator of effective/efficient budget management. And bigger (in terms of total spend) is not better.

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