Thursday, April 01, 2004

Outsourcing Search Engine Marketing

Search engine marketing is crucial for the success of online businesses -- but should you take on search marketing in-house, or outsource this challenging task to a contractor or agency?

A panel of experts at the recent Search Engine Strategies Conference in Chicago addressed these issues to help business owners make better decisions about their future search engine marketing campaigns.

"In case anyone hasn't noticed, search engine marketing has exploded over the last few years," said Nate Elliot, online marketing and media analyst for Jupiter Research. Elliot also pointed out that as recently as 1997, search engine marketing was only a $50,000 industry - this in contrast to the $1.6 billion (or roughly 28 percent of all online ad spending) spent on search advertising in 2003.

Because of this growth, management of search engine marketing campaigns is becoming more complex. As businesses face greater competition online, advertise across a wider range of search engines, and purchase more keyword phrases, it has become increasingly difficult for companies to handle campaigns internally. In fact, a recent study by Jupiter Research showed that half of all large marketers and over 30 percent of small marketers had trouble managing their own search engine marketing campaigns.

Search engine marketers are also moving beyond simple click-thru tracking and focusing on detailed conversion data and ROI. Many large marketers (68 percent) are now tracking the number of sales produced by an SEM campaign, while 53 percent track the number of leads. Additionally, 32 percent of large marketers are tracking the number of registrations from a campaign and 29 percent track associated brand lift.

The combination of expanding campaigns and the desire to carefully track campaign details is causing many companies to look to third-party firms to manage their search engine marketing. Jupiter Research reports that 48 percent of large marketers are currently outsourcing their SEM programs. Their studies also show that 80 percent of companies that outsourced are satisfied with the performance of their campaign (compared to just 58 percent for those that handle SEM in-house).

Jupiter Research's reports clearly indicate a trend toward outsourcing SEM but for companies yet to make the transition, how should you select a vendor? First, it's important to understand the range of services that search engine marketing companies offer. Primary services include:

Site optimization for both organic positioning and increased conversions
Management technology like trusted feed and bid management
Tracking technology like ROI analysis and conversion rates
Professional services like strategic planning
With such a wide variety of services and varied definitions of SEM terms used by search engine marketing professionals, it can be difficult to get a true "apples to apples" comparison on proposals for service. Chris Sherman of suggested that companies consider creating their own request for proposal (RFP). Companies can carefully outline the specific services and price ranges that they are looking for and send it to SEM firms they are considering. For more information and a sample RFP, check out the SearchDay article "Outsourcing Search Engine Optimization."

It's also important for companies to decide what services are important to them and to seek out search engine marketing firms accordingly. Chris Sherman explained that it's important to think of your strategy when making decisions about hiring an SEM firm, pointing out that your marketing goals should dictate the method of promotion - not the other way around. "Don't think we're going to do organic or we're going to do paid placement... consider what it is you are trying to accomplish and then plan a strategy and a plan of action accordingly."

Josh Green, director of e-marketing for Road Runner Cable has experience in selecting an SEM vendor. He is currently outsourcing the Road Runner Cable search engine marketing needs to three different firms. Green suggested speaking to other companies happy with their search engine marketing campaigns and asking for referrals to their SEM partners. He also suggested attending industry-related conferences and approaching speakers or individuals at networking events to find out who they recommend.

Daniel Perry, search engine specialist at Career Education Corporation oversees nearly one dozen SEM firms working with more than eighty sites owned by his company. Perry explained that they hire multiple firms to handle their Web sites so there isn't a heavy reliance on any one firm for their search engine marketing needs. For large company looking to promote multiple Web sites, Perry recommends testing the abilities of a particular firm without committing all of their business to them. This has allowed Career Education Corporation to select firms that performed well and to give them additional sites to work on.

Companies looking to outsource their search engine marketing campaigns also need to understand that SEM is not cheap. Prices range from $75 to more than $200 per hour while full site optimization can start at $5,000 for a small site. Larger companies seeking to outsource full scale search engine marketing campaigns for e-commerce sites can expect to pay anywhere from $20,000 on up to more than $100,000 per year.