Monday, January 26, 2009

Search Insider: Moving Toward Rational SEM Agency Procurement

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.

Steve Baldwin is editor-in-chief at Didit, an agency for search engine marketing and auctioned media management based in New York. You can reach Steve at

Search Insider for Monday, January 26, 2009:

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