Most businesses currently running SEM campaigns could vastly improve their performance with outside help. I can say this with confidence for two reasons: first, having worked with dozens of companies over the last eight years (most of whom have received millions in funding from top-tier Silicon Valley venture capital firms), I can speak from experience that I rarely go to a company that is doing search 100% right. This can range from very basic errors (no tracking and thus no insight into ROI) to more complex but no less important problems (misunderstanding of bidding strategy, insufficient ad text or landing page testing).
Second, most businesses aren’t in the business of search marketing – as such, they never really focus enough attention on their campaigns to really get it right. After meeting the senior executives at all those companies, as well as the marketing departments, I know that the personnel at these firms are incredibly bright and dedicated. But when search marketing is one of 15 things you need to do in a day, inevitably you end up doing a lot of things poorly instead of a few things well.
As a result, a lot of companies these days turn to outside consultants or agencies to help them with their search marketing campaigns. This can be an incredibly smart decision – if you pick the right firm. Picking the wrong firm can be a massive time suck and a financial disaster. Being someone who has been on both sides of the search consultant/agency negotiations (choosing the outsourcer and pitching to be the outsourced consultant), I’ve learned a few things along the way that will help you to make the right choice on your search marketing consultant or agency. Here’s my top 12 tips (not in order):
1. Consider the size of your account.
Do you spend $500 a month on search or do you spend $500,000? How much do you plan to spend in the future? This is a crucial starting point before you begin looking for outside help. If you expect to spend under $2500 a month, very few agencies will want to work with you – you are better served by a local consultant. Between $2500 and $10,000, you have a few more options. For example, companies like Yodle.com and ReachLocal.com have semi-automated solutions that can work well for local businesses looking to ramp their search spend, and experienced SEM consultants are also a good option. Once you get over $10,000 a month, small agencies might be interested in your business. At $50,000 and above, even the biggest search agencies will want to talk to you. I’m not suggesting that just because you have a big monthly spend you should use an agency, but I am suggesting you limit the scope of your research based on the size of your budget – it will save you time.
2. Ask for representative clients, then find them on the search engines.
PowerPoint is a wonderful tool isn’t it? Any agency can create a PowerPoint that makes it seem like they have the most advanced technology and proprietary methods for getting your business optimized on AdWords and YSM. My advice is to avoid the PowerPoints all together. Ask the consultant/agency for a few representative clients and then go onto the search engines and look for their clients’ ads. Are they showing up for keywords you would expect to have high conversions? Is the ad text targeted and compelling? When you click-through, is the landing page targeted to the keywords and likely to convert a potential customer? Is there evidence in their destination URL that keyword-level tracking has been implemented? Don’t rely on a salesperson to tell you how great their SEM services are, check it out for yourself!
3. Decide which pricing model works best for you.
There are four basic agency/consulting pricing models in SEM: percentage of spend, hourly rate, fixed monthly fee, and performance-based fee. Percentage of spend is a charge based on the amount you spent that month. For example, if you spent $100,000 and your agency gets a 10% percentage of spend fee, you would pay then $10,000 on top of the $100,000 you spend on your SEM ads. Hourly rate is what most consultants usually charge (usually between $100 to $250 an hour, depending on expertise). A fixed monthly fee is a flat rate regardless of your spend amount of how many hours someone spends on your account. And performance-based fee is basically a revenue share based on the amount of profit the outsourced firm makes for you (this is a very uncommon billing method at the moment). If you think you will only need a few hours of help a week, an hourly consultant is a good bet. A small campaign (say, under $10,000 a month of spend) that you want completely managed by outside help is perfect for a fixed fee relationship. As your account becomes bigger, you’ll encounter larger agencies who will usually insist on a percentage of spend pricing plan. Performance-based agencies exist, but they generally consider themselves to be “online lead generation agencies” rather than SEM agencies. Still, these types of companies are out there and it doesn’t hurt to ask a potential agency if they would be willing to take part or all of their compensation on a performance basis.
4. Determine what services are and are not offered.
Not all SEM agencies and consultants are the same. Some only want to deal with your keywords and bids. Others will work on ad text but not landing pages. And some will help you in every element of your SEM campaigns (keywords, bids, landing pages, ad text, tracking, reporting, search engines). Personally, I recommend working with outside SEMs who will at a minimum do keyword creation, bid adjustment, ad text testing, and tracking and reporting for you. At the end of the day, however, it’s your decision to figure out what services you do and don’t need. For example, if you have great internal Web designers, don’t pay extra for an outside firm to do landing page optimization for you. Knowing what you want before you begin negotiations can save you a lot of money.
5. Determine your long-term SEM strategy.
Is SEM always going to be less than 5% of your marketing budget, or could you see SEM eventually driving the lion’s share of your business? The answer to this question should help you decide whether you want an outside agency that “gives you a fish everyday” or “gives you a fishing pole and teaches you to fish.” If SEM is a “nice to have” for your business, I recommend that you don’t spend too much time trying to learn it yourself. I equate this sort of situation to getting an oil change at Jiffy Lube; sure, you could change your oil yourself, but you have better things to do and it’s worth the $30 to have someone else get dirty. On the flip side, if the success of your business depends on perfect SEM execution, you should think about hiring an outside consultant that will not only optimize your accounts today, but also teach you the ‘dark art’ of SEM. From my experience, if you hire an SEM expert for between one to two weeks of intense training, you can learn the ropes of SEM to the point that you will only need periodic (perhaps monthly) refresher courses. Keep in mind, two weeks of training is 80 hours of a consultants time and that is not cheap (probably between $8,000 and $20,000 for this service), but if SEM is vital to your business, this investment will be well worth it.
6. Look for vertical expertise.
If you are a personal injury lawyer, do you really want an “ecommerce SEM expert” optimizing your SEM? Of course not. As SEM has become more and more popular, I am starting to see vertical SEM consultants and agencies emerge. This is not an absolute requirement, but if all other things are equal, choosing an expert who has direct experience building campaigns for similar businesses to yours should tip the scales in his/her favor.
7. Understand the difference between a sales rep and an account rep.
A classic bait and switch technique is to send in a senior level expert to pitch your business and then turn the account over to a freshly-minted college grad once the deal closes. If you are making your decision based on the quality of the agency staff, make sure that you meet the actual person or people who will be managing your account on a day-to-day basis before you sign on the line that is dotted. By the way, there can sometimes be an advantage to having that new college grad work on your account (they tend to be less jaded and can work longer hours than the ‘over 25 crowd’), but that’s a decision you need to make with your eyes open.
8. Distance from your office may be relevant.
Are you located in Boise, Idaho and getting pitches from an agency in Chicago? Phone consultation can be very effective, but there is value to having face-to-face meetings from time to time. Back in 2001 Yahoo screwed up my Yahoo Mail account and I couldn’t get any messages. After writing them for days without response I finally sent an email that said “I work in Redwood City. If I don’t hear from you in 24 hours, I am coming to the Yahoo headquarters to personally get an answer.” My email was fixed in less than an hour. Idle threats aside, being close to your service providers is just a good way to get more personal and frequent help.
9. Contract length, extra fees, incentives.
Read the contract before you sign it! Are you getting locked in to a two year contract with a minimum bill of $10,000 a month? Is there a fee to have a phone conversation? Is the consultant/agency willing to work for a lower fee in exchange for a performance bonus if he hits certain monthly profit goals? All contracts are negotiable and it’s your loss if you don’t try to change the language to benefit your company.
10. If it sounds too good to be true . . .
I saw a terrible ad on AdSense yesterday. It said “Guaranteed 1st Page Placement on Google – $49/month.” I clicked through (to cost them money and to figure out the scam) and the fine print basically said you’d show up on at least one term ‘related to your business’ on the first page through either paid or organic search. So if you are a Miami plumber for $49 a month you might show up in position #10 in the paid results for “North Miami leaky sink free consultation.” The clicks would cost the SEM firm $1 a month and they’d get $48 in profit. Any agency or consultant who starts off by talking about ‘guarantees’ or ‘insider information’ or ‘X thousand percent gains in profit’ isn’t being upfront with you. Find an agency that is realistic about what it can achieve for you and is under-promising and then over-delivering to build a long-term relationship.
11. Determine if your agency is outsourcing to another agency.
Some agencies are nothing but glorified salesforces. They will pitch you on their proprietary techniques and technology and then outsource your business to a bid management firm or an Indian outsourcing company. You have a right to know who is doing what for your account. If you are uncomfortable with the agency sharing your campaign data with other companies or using overseas sub-contractors, make sure to you ask potential agencies to disclose this data to you.
12. What happens after you cancel?
Some people and companies are wonderful to work with . . . until you cancel your contract. If you happen to have stumbled into a relationship with a vindictive agency, you might wake up to find thousands of keywords in your AdWords account deleted, or with a bill from the agency for several thousand dollars for “data transfer” and “transition costs.” Indeed, some contracts specifically mention these sort of extra costs in the event of a cancellation. The best way to avoid this sort of problem is to pro-actively include favorable language in the contract. For example, “in the event of cancellation, agency agrees not to delete any keywords, ad text or other information from client accounts. Agency agrees to provide a transition document at no cost that summarizes learnings and best practices from the relationship. Upon request, agency will remove any and all tracking URLs from client account at no additional cost.” Keep in mind that I am not a lawyer, and I literally made up that language in a few minutes. Talk to your company lawyer and he or she will be able to create a much more powerful clause that protects you.
If I sat here staring at my computer for a few more hours, I’m sure I could come up with another dozen tips to help you choose an SEM agency. But as I read over the tips I’ve already created, I’m sure any additional tips I’d add would fall into three categories: 1) ask lots of questions; 2) know your business; 3) read the contract! There are a lot of great SEM experts out there waiting to help you. Making an upfront investment in thorough research into a potential service provider will ensure that you find the right help for your business.