No.
Clients, when does using a search agency make sense?
There is not one clear, clean answer. However, from a client perspective, you’d better have at least one answer, and it better be about adding value.
Its not about price
I cannot tell you how tired I am of price selling. We hear it all the time…”this agency will do it for 12% instead of 15%.” or “they will do it for 10%”. Crap! Then we feel the price pressure. We know the level of service needed to do the job right is well beyond the level that can profitably be provided at some of these price points… and not just for us, for the other agencies as well.
This kind of selling, and buying (it takes two) is bad for everyone. Along the lines of what I wrote last month, , the spiral downward into the hell of unprofitable or no-value relationships is good for no one.
When not to hire an SEM
This brings me to the article that spawned this post.
http://boss.blogs.nytimes.com/2012/10/31/should-i-manage-my-own-adwords-campaigns/
Paul Downs (http://boss.blogs.nytimes.com/author/paul-downs/) is a business owner and also writes for NYT’s blog. His pieces are well worth the read. He manages his SEM in house; himself actually. From the sounds of it, he is doing it well, and more importantly, he enjoys doing it. He only spends about $10k / month. For a small business, that is a lot of money (been there, know that). But for an agency that wants to take on the business, and provide value, it is just not worth taking it on from someone like Paul.
When does this makes sense for an agency? When they can add value?
And this is where the answer changes by client. For Paul, you’d need to spend a lot of time to top is performance. You won’t. He’ll pay you far more than any efficiency you might gain (he’s done the back-of-the-napkin math, and he’s right). There is no more value to add.
For others, who perhaps are not as adept at it as Paul, or for whom the opportunity cost of focusing on Google or Bing SEM is too great, then paying an agency to manage it makes sense. The question the agency has to answer for the client is will they get more by employing the agency than the cost of doing so. In other word, what value are you adding?
(Funny that some of the folks who tried to sell Paul started off the pitch telling him what the end result would be without actually knowing the program. Others looked at the program and quoted him a fee that was in excess of the efficiency / savings they estimated.)
What about larger companies with higher media spends using an SEM?
I have a friend who is very successful. If he wouldn’t get bored out of his mind, he could have retired in his early thirties. The financial success was the result of his success with people and problem solving. In any case, one of the companies he built grew quickly. When he started, he managed the SEM program himself. Then, as the company continued to grow and his attention had to span across operations, vendor management, technology, HR and more, he hired a person to manage the SEM. He kept a close eye on it, and could tell you exactly how it was doing and why. But, there was someone in-house managing it.
Fast forward, more growth, multi-six figure monthly SEM spends and he brings in a C-level team to take the company to the next level. One of the first things they did was bring in an agency.
Why? Because, continuing on the path my friend was on, their attention had to go toward other activities to which they could add more value. They also recognized that at the scale, the dynamic level of the SEM program, and the internal resources required to run SEM, along with higher level guidance would come with too high of an opportunity cost – their own focus.
This is where an agency partner can add value. Not a cheap, low cost provider of SEM, but someone who can be paid to spend the time to learn the business, stay close to the overall marketing strategy and direct the SEM program accordingly. A low cost provider would not be able to take the time to do this. In the end, a low cost provider would suck up as much management time from the client as hiring an internal team. There is no value there.
As you look to hire and SEM, or offer services as an SEM, there are a couple simple questions:
1) what incremental (added) value will be achieve with the partnership?
2) can the agency provide that needed value at a profitable level?
In order to answer these questions, you must do what you should do anyway: set the objectives, establish the expectations and agree on a fair price.