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MUSCLE13
03-14-2005, 01:09 PM
Excerpt -

Jay MacDonald, an analyst at DeSilva & Phillips, added that a flurry of acquisitions is imminent, yet it all may be for naught. “As technology improves, the need for optimization will go away,” MacDonald said. “Their business won’t exist in three years.”


Search-Specific Agencies Fight for Survival http://www.mediaweek.com/mw/news/recent_display.jsp?vnu_content_id=1000837282

St0n3y
03-14-2005, 04:27 PM
For one, he does not say how he thinks technology will cause SEOs to disappear. Maybe I'm shortsighted but I don't see how. Technology woks WITH seo, but I don't see how it would replace it.

Several years ago people were saying SEO was dying, and it hasn't yet. Sure many SEO companies may get bought out by ad agencies, but as he states himself, many ad agencies don't see enough of a profit in it. So why bother buying in, if that's the case. If they do, their prices will be extremely pricey leaving plenty of room for the less expensive companies to thrive.

MUSCLE13
03-14-2005, 04:35 PM
Consolidation is probably the key theme here. As in any new explosive business there will only end up to be a few winners when the industry matures. It happened with traditional ad agencies. It happened with the dotcom boom itself. SEM is no different. There will probably just be a few winners.

MUSCLE13
03-14-2005, 04:50 PM
Another excerpt from the Mediaweek article -

“The search agency space right now is in the same place that the online agency space was five to seven years ago,” said Stuart Bogaty, CEO of mSearch North America, which was recently launched as a sister agency to mOne. “The smaller guys are either going to be acquired or will not be able to support their businesses.”

St0n3y
03-14-2005, 05:00 PM
I certainly agree that many SEOs will eventually get weeded out. It happened a few years ago and it will undoubtedly happen again. Only the strong survive in anything.

Mikkel deMib Svendsen
03-14-2005, 05:23 PM
It's not even summer time (where there is usually not amny real news to repport) and yet, we still get this same old storie again :) Oh my ...


Yes, things will change. I've been in this industry for many, many years and this is for sure one thing that I have learned: Things change - all the time. 75% of what I do today I know I am probably going to be doing, the same way, in 12 month. Sometimes even in 6! Thats the nature of this industry.

Sure companies will merge and smaller SEM-firms will be consumed by larger ones but there are a couple of things I an very confident about:

1) There is going to be a need for SEOs as long as people use some sort of "information search" - and I bet thats going to stick around for a while. Even with the best technology or human editors (such as on a news paper) there will still be someone that rank at the top and some that don't - AND, some people will know how to push you there and some won't. Why do you think we still have PR agencies, spin doctores and all sorts of experts that can influence the solid newspaper editors and journalists? Because it works. Because it works very well indeed - just as well as SEO do and will continue to do.

2) There are going to be fewer mid-sized SEO/SEM companies around in 2-3 years. Some of them will have merged - others sold. However, just as in advertising and PR there is still going to be a huge gap open for the creative specialised consultant - weather he is doing PR, advertising or SEO. Independant SEOs is still going to have an advantage over the larger firms in the fact that they will be able to shape and adjust their offerings and strategies much faster. Also, they will be bale to take risk and implement strategies that would never go in a large firm - especially a public one. We will probably see more "elephants" in this industry - but the "snakes" will still survive :)

MUSCLE13
03-14-2005, 05:33 PM
Will SEO margins be squeezed as the search engines themselves try to bring some of the money back in that the SEO's are taking now? Of course. Too much money out there in the middle. As margins come down, consolidation is inevitable in any business.

St0n3y
03-14-2005, 05:50 PM
I think SEO prices will only continue to rise as more expertise is needed to get the job done.

MUSCLE13
03-14-2005, 05:55 PM
I think SEO prices will only continue to rise as more expertise is needed to get the job done.

I think this is where technology comes in. There is so much money out there in the middle that no doubt the search engines will work to bring that money back into the industry. As search ad technology and targeting improves the middle will get squeezed.

andrewgoodman
03-14-2005, 09:16 PM
Analysts should be forced to work in the real world from time to time. Their abstract musings often seem removed from the day-in, day-out demand that real practitioners feel in phone calls and handshakes from real customers with real needs. (And revenue growth of course.)

There have always been advertising and marketing agencies of one sort or another, and there have always been successful and unsuccessful companies. The unsuccessful ones always die.

SEM firms who are unwilling to adapt to change may find themselves in trouble, but that's unsurprising. In business you need to adapt.

Many SEM firms do face a grow-or-die proposition, perhaps, but someone might have said that about webmasters or web services too. Many clients like to deal with a consultant who has time to take care of them, which is how small shops have always gotten plenty of work. The market is HUGE, varied, and open to innovation.

Essentially this analyst is saying something akin to "all companies will eliminate their marketing departments." It's overblown and probably biased in some hidden way.

Let's use the example of law firms. Consolidation? Sure. There are big law firms, and little law firms. Now why would a bunch of spokesmen for big law firms suddenly start talking about the imminent demise of all the little law firms? Probably because the big law firms are either (a) threatened by how much business the little firms continue to take from them; (b) aiming to acquire more little law firms, and they are using the press to haggle about the price.

MUSCLE13
03-14-2005, 09:28 PM
There have always been advertising and marketing agencies of one sort or another, and there have always been successful and unsuccessful companies. The unsuccessful ones always die.

SEM firms who are unwilling to adapt to change may find themselves in trouble, but that's unsurprising. In business you need to adapt.

Many SEM firms do face a grow-or-die proposition, perhaps, but someone might have said that about webmasters or web services too. Many clients like to deal with a consultant who has time to take care of them, which is how small shops have always gotten plenty of work. The market is HUGE, varied, and open to innovation.



The total US advertising industry spend is over $250 billion per year and growing. Pretty HUGE. How many traditional media ad agencies are left after consolidation? Why won't the same happen in SEM? Consolidation is inevitable. Only a few will win.

rcjordan
03-14-2005, 09:58 PM
All of this assumes that the search distribution model, i.e., how we get in front of consumer eyeballs, remains as we've come to know it over the past 10 years. I don't think it will. For consumer markets, my largest concern is that we're headed toward a "push" or broadcast system combined with ultra-convenient but largely walled garden browsing appliances. The "real" internet will be there, but 3 clicks away. Search as we know it will be just a part of the playing field. How large a portion and even if you'll be allowed to play is up in the air.

In 3 years, the digital living room kicks in bigtime. Now go find that article by Battelle about integrating search with TV and see where SEM will be when paid placement cuts it out of the loop.

Signs of 'corralling with commercial intent' are everywhere from autolinks to xbox
The new console will offer an on-screen guide with a shopping marketplace in which players can buy new game levels, including weapons, cars or character outfits, Microsoft told a game developers' conference in San Francisco.
Forbes (http://www.forbes.com/infoimaging/feeds/infoimaging/2005/03/10/infoimagingcomtex_2005_03_10_up_0000-1192-bc-us-xbox.html)

...The next-generation console will offer an on-screen guide with a shopping marketplace in which players can buy new game levels, weapons, cars or character outfits. Microsoft will set up a payment system so that even small-ticket items can be easily purchased.....

....Players may also have the ability to spend money on music. The on-screen guide will allow players to listen to their own music during games instead of the game soundtrack. Microsoft said the feature takes the burden off of developers to include custom music in games, but the company may also have less altruistic motives.

Microsoft didn't give many details about the music system, but it's easy to imagine the Xbox connecting to a music ecosystem that includes the MSN Music online store or the music library on a Media Center PC. Microsoft executives have long expressed the desire for the Xbox to become part of a larger home-entertainment system with a sophisticated PC at its core. ... Seattle Times (http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2002202568&zsection_id=2002119995&slug=xbox10&date=20050310)

Infotainment and technology convergence will change this industry at its root.

dannysullivan
03-14-2005, 10:01 PM
Will SEO margins be squeezed as the search engines themselves try to bring some of the money back in that the SEO's are taking now? Of course. Too much money out there in the middle. As margins come down, consolidation is inevitable in any business.
The money SEM firms are taking now? First, let's get clear on some definitions. When I say SEO, I mean a company that works for getting only "free" or "natural" listings and the activity of getting better listings for free. Ad agencies aren't going to wipe out SEO as an activity. In fact, it's something they especially aren't going to enjoy getting into, as you can guarantee it, nor can you just mark up what you "pay" for it.

As for the analyst, he talks about technology improving and making optimization not needed. My read of that is that he's not saying consolidation is involved. It sounds like he's saying search technology will improve so much that companies won't need to hire search engine optimization firms to aid in ranking improvements. I flatly disagree. In fact, SEO will probably be more important than ever as search fragments into verticals. SEO firms will better understand how particular content should be fed to shopping search engines, local search engines and so on. In addition, the great technology improvement that some of the same type analysts have praised Google for hasn't wiped out SEO. I don't see it changing so dramatically that things just naturally always happen the right way in the next three years.

Now as for SEM, the umbrella term for search marketing through paid and unpaid means, back to that margin squeeze. In the US, search engines aren't paying a commission. So search marketing firms either have to mark up or add-on in some other way to earn for what they do. Is that the money the search companies are supposedly going to try and grab? I think not. There's not much "middle" to begin with. What middle there is was already hard earned by companies that proved there was a reason to come to them for help rather than go to the search companies already, who are happy to take any big client by the hand. And ultimately, that's because you cannot trust that Google is going to do the right thing for you in terms of getting your buy on Yahoo -- and vice-versa. A third party firm? For them, it's in their interest to ally with you.

Anyone curious, I posted some additional thoughts on the article over here: SEMs: Your Days Are Over (Not) (http://blog.searchenginewatch.com/blog/050314-204927).

MUSCLE13
03-14-2005, 10:30 PM
Honestly I don't think one of you SEM guys has ever listened to a quarterly earnings conference call from a search engine company. Do you guys ever research at all??? It reminds of the the old dot com days. Just my opinion

Anyway- Really simple, Just for an example - Lets say the search engine charges 70 cents and the advertiser pays $1.00 to the SEM guy who goes and buys the inventory from the search engine for 70 cents. If the advertiser is willing to pay a dollar and the search engine is only getting 70 cents of that you guys don't think that search engines are going to work like crazy to better target the technology so that they can get some of that 30 cents in the middle? Danny you honestly believes margins won't be squeezed in the SEM business???

MUSCLE13
03-14-2005, 10:44 PM
Now SEO Danny. If money is being poured into SEO to get the free listings optomized and thats part of search spend, you don't think the search engines will try to bring that money into advertising spend? If technology and relevancy improves and optimization falls there is more money available for keyword spending.

If consolidation happened in traditional ad agencies why won't it happen in search ad agencies?

Chris_D
03-14-2005, 10:56 PM
Anyway- Really simple, Just for an example - Lets say the search engine charges 70 cents and the advertiser pays $1.00 to the SEM guy who goes and buys the inventory from the search engine for 70 cents.

Muscle13 - thats a pretty interesting pricing model.

Do you know of any professional SEM companies that operate that way in a market where the inventory 'buy' price is determined in a 24/7/365 auction process? Its not a fixed price CPM banner ad buy.

Most SEM's I have spoken to charge on a head hours basis for the added value they bring.

MUSCLE13
03-14-2005, 11:45 PM
Muscle13 - thats a pretty interesting pricing model.

Do you know of any professional SEM companies that operate that way in a market where the inventory 'buy' price is determined in a 24/7/365 auction process? Its not a fixed price CPM banner ad buy.

Most SEM's I have spoken to charge on a head hours basis for the added value they bring.

Ok let me reword it

Lets say the SEM guy bids and gets inventory for 70 cents and the advertiser pays $1.00 to the SEM guy. If the advertiser is willing to pay a dollar and the search engine is only getting 70 cents of that you guys don't think that search engines are going to work like crazy to better the technology so they can bring that dollar into the industry or at least more than 70 cents.

There is no difference Chris. Differing price determination methods do not change the conclusion that SEM margins will still be squeezed.

Again, if consolidation happened in traditional ad agencies why won't it happen in search ad agencies?

dannysullivan
03-14-2005, 11:58 PM
I've listened to a number of quarterly earnings calls, along with many other discussions of things that go on that aren't covered in calls. I also understand that the earnings calls don't tend to cover the less visible side of search marketing, that which the search marketers themselves do. In short, if you only hear things from what the search engines tell you on calls, you aren't getting a good overall view of the search marketing space.

So if you're honestly looking to understand the space, don't imply that the search marketers responding in this thread are somehow clueless. They are on the front lines of the spending. They see things anyone should take into account. They are as much a part of the market as the search engines themselves, not some lesser children. In fact, many of them were earning money on search long before the search engines realized they could do paid listings.

Now, as for paying the search company $0.70 by working with them directly or the search marketing company $0.80 cents (that's a 15 percent markup, which is typical). Why pay the 15 percent?

Because I see the value in having the search marketing company watching out for me. They've proven they'll do other things like help with my conversions, make sure that I've not overpaying when the bid management tools the search engines offer that are supposed to protect me don't. They'll ensure I don't run my budget out or get involved in bid wars that might not make sense.

The search engines already try to grab direct business when they can from search marketers. This isn't something new. Despite this, the search marketers are hanging on to business.

As for trying to somehow get the SEO money direct to them, Yahoo does that through a program called paid inclusion. For their pain, they get a lot of bad PR. Google, if it tries to grab the SEO money, gets a bad rep of mixing church and state.

As for consolidation, I'm certainly not saying there won't be consolidation. But that doesn't mean you don't have standalone shops. Geez, there are ad agencies big and small across the US. It's not like we've got only five ad agencies. And we have standalone PR agencies, standalone brand development agencies, standalone direct marketing shops. I think search is plenty big enough that some standalone shops of various sizes will remain -- especially many, many of the small firms.

Chris_D
03-15-2005, 12:07 AM
Most SEM's I have spoken to charge on a head hours basis for the added value they bring.

'Reselling' inventory, and 'marking it up' isn't a popular business model in the world of SEM, Muscle13.

Like most professional SEM's, we charge for the value we add - which the search engines themselves don't provide - and its based on head hours.

You asked:
Do you guys ever research at all???
I'd respectfully suggest that you really need to so some research on what's involved in managing and measuring PPC campaigns across multiple search engines. Then you may better understand that its not a 'margin squeeze' situation. Professional SEM is more about maximising the clients ROI based on conversions - its not generally a simplistic 'resale of clicks' business model.

MUSCLE13
03-15-2005, 12:14 AM
Now that was a pretty cool answer Danny. I don't agree with it but at least you SEM guys are addressing the issues and for once treating me like I am human.

Value added in traditional ad agencies. Isn't it mostly creative? How can creative work into search? I just don't see it.

Won't the search engines themselves try to do the value added parts you talk about (through technology) if they see they can get more of the dollars in?

MUSCLE13
03-15-2005, 12:20 AM
I'd respectfully suggest that you really need to so some research on what's involved in managing and measuring PPC campaigns across multiple search engines. Then you may better understand that its not a 'margin squeeze' situation. Professional SEM is more about maximising the clients ROI based on conversions - its not generally a simplistic 'resale of clicks' business model.

Wouldn't this lead to consolidation? If its all about maximizing client ROI based on conversions, managing and measuring, wouldn't scale matter a lot in SEM?

MUSCLE13
03-15-2005, 12:28 AM
As for trying to somehow get the SEO money direct to them, Yahoo does that through a program called paid inclusion. For their pain, they get a lot of bad PR. Google, if it tries to grab the SEO money, gets a bad rep of mixing church and state.



Paid inclusion is a dirty phrase now isn't it? My thought was that as search technology gets better and more relevant, optimization will have less impact and the money spent in optimizing will go into sponsored links.

Chris_D
03-15-2005, 12:37 AM
Its traditional 'media buying' that works the way you described Muscle13. Traditional publishers sell via 'accredited media buyers' who get a commission on the value of the sale. 'Online media buyers' do much the same for banner advertising etc.

SEM is different - primarily because the 'inventory' is not fixed price, and there are many derivatives of what would appear to be a reasonably straight forward 'keyword' inventory buy.

e.g the client sells tennis shoes. The search engine can sell the client the trigger word 'shoes' or even the more targeted phrase 'tennis shoes'. But maybe the client only sells women's tennis shoes; and doesn't sell Nike or Adidas brands.

Its about getting the client focussed sales leads and conversions at lowest cost. The SEM works for the client - therefore in the client's best interests - and adds value. The SE's sell clicks - that's only a small part of the whole story.

The only 'consolidation' is that 'traditional media buyers' (ie advertising agencies) and even 'online mdia buyers' are trying to get their heads around SEM - usually by buying SEM agencies.

It isn't vertical consolidation where the SE buys the SEMs - or even where the SE's offer SEM services across their competitors offerings.

dannysullivan
03-15-2005, 12:41 AM
Paid inclusion has been a dirty word in some circles for as long as 2002, I'd say. That when I did an article about the mixed message it delivers. It's certainly been dirtier since Feb. 2004, when Yahoo unveiled a new program that drew so much flak that Ask Jeeves and MSN both decided they needed to get out of paid inclusion in order to be seen as clean. Google, of course, has never had it -- pain inclusion to them is one of the evil things they would never want to do, and they specifically called the practice out in their IPO filing. http://searchenginewatch.com/webmasters/article.php/2167941#inclusion has a round-up of some key articles on the issues, along with an update here, http://searchenginewatch.com/searchday/article.php/3369651 (the third of three parts I wrote)

As for the tech getting better, it doesn't. It gets better for a bit, making SEO harder for those who want to do it without doing paid. That's when the balance tips and some realize they should just buy it. But SEO is often helpful regardless of the technology. It always has been. That's why the search engines themselves will offer tips.

So I think there's always a role for someone who understands how to influence those unpaid results, in the same way we always have a role for PR people. They can't guarantee coverage, but they may be able to help. And getting that coverage is literally something you can't buy from the search engines/media direct, plus the value is enormous because unlike an ad, it's a search engines stamp of approval that you should be among their top unpaid listings.

If its all about maximizing client ROI based on conversions, managing and measuring, wouldn't scale matter a lot in SEM?
Yes, and it's another reason why you'll see consolidation. But you'll also see, as we have now, tool vendors license their tech to smaller companies. That's because there are smaller companies that don't need all the bells and whistles and who simply cannot afford the overhead a larger firm may want.

MUSCLE13
03-15-2005, 12:45 AM
The only 'consolidation' is that 'traditional media buyers' (ie advertising agencies) and even 'online mdia buyers' are trying to get their heads around SEM - usually by buying SEM agencies.

It isn't vertical consolidation where the SE buys the SEMs - or even where the SE's offer SEM services across their competitors offerings.

SEM buying SEM is what I meant by scale. Again if its all about ROI conversions, measuring and managing doesn't scale matter?

MUSCLE13
03-15-2005, 12:54 AM
Well it looks like Danny answered my last question on scale.

But the "tech getting better for a bit" I don't get at all. There has got to be a point where search tech gets to, where optimization isn't that helpful.

Thanks for addressing the issues and my questions. Search is a fascinating business. Most targeted form of advertising I have ever seen.

Mel
03-15-2005, 01:05 AM
Well it looks like Danny answered my last question on scale.

But the "tech getting better for a bit" I don't get at all. There has got to be a point where search tech gets to, where optimization isn't that helpful.

Thanks for addressing the issues and my questions. Search is a fascinating business. Most targeted form of advertising I have ever seen.

I think the point that you seem to be missing is that there are only ten spots available on the first page of organic search and the search engines job is to put the ten most relevant (according to its algo) pages in those positions, so the SEs are not looking out at all for the other nine million pages who want to be there.

SEMs on the other hand are able to advise the client whether orgainic or PPC search is the most profitable road to take and once that is settled how to do it whichever way and gain the best results.

There would be a direct conflict of interest if the search engines were taking money for placing inorganic results, thus there will always be a niche for the independant consultant.

Or to put it another way are you going to pay a tax consultant or the IRS to prepare your tax returns?

Nacho
03-15-2005, 04:00 AM
I believe SEO will always be here to stay. There will always be high quality professionals that will not be focused much on the basics any more because companies will know the basics, but trying to help the client on the complex issues. Just like other industries (for example with law), you could go to Kinkos and write up a simple will, but can you do a living trust on your own? Not likely. Can you figure out title tags, meta, keywords, write descent content and stay away from the no no’s? Easy. Can typical copywriter do clustering analysis on their own content? Not very likely and even though it’s very rarely needed today, what about in 5 years / 10 years / more?

Search engine algorithms are getting smarter every year. What we find sooooo easy these days will be looked back and you will hear some folks saying, “remember when 1,000 blog links would get any spammer #1 on MSN Search overnight if they really wanted it?” They keep celebrating, but that will not last forever. At least I hope not, but spammers will always exist. Always! A spammer is a spammer only because it owns BIG laboratories perse to do huge experiments of websites understanding technology in a way that can determine pretty much all factors to any algorithm. The only difference to the future will be that their boundary limits to game optimization factors are going on non-stop diet and their hats are being forced to the dry cleaners.

There are also so many niches that are considered small, but with no competition it’s a market that’s up for grabs, it’s huge!!! Take the Hispanic market or any multilingual search markets. Take optimizing a press release for the news search engines or like Danny says, take SEO for shopping or local. I tend to see SEO today like your typical General Doctor back in the early days, where you had a soar tooth “call the doctor”, had a mayor fever “call the doctor”, having a baby “call the doctor” . . . and this physician would grab it’s little black brief case and travel by horse or foot to the patient’s home. Now, these days we have special doctors even for just cosmetic makeovers that say “oh, I only do nose jobs”.

Now, for PPC as part of the SEM side for discussion. Ask Andrew Goodman why clients pay him big bucks to manage thousands of keywords. Do companies want to get their hands dirty while they are barely understanding how to calculate conversions and ROI? No way! Let the experts take that! Can a small mom & pop online store learn how to do a 50 or 100 keyword campaign? Sure, no problem, and will probably get very good at it. That’s great! Much in part thanks to people like Danny Sullivan and professionals speakers from a Search Engine Strategies conference or similar.

One of the reasons why I love this industry is because it’s still on diapers and it’s so much fun watching it grow up! :)

excell
03-15-2005, 07:45 AM
Infotainment and technology convergence will change this industry at its root.

Hasn't "the root" always been to make a direct connection between the consumer and the offer - the seeker & the information?

I can see a day when technology is so advanced as to allow for direct brain implantation and I can see in that day there will only be a few "converged" players doing the drip feeding.

I think we are a long way off from that (at least I do hope so - I hope we remain independently intelligent for a while longer)

so in the meanwhile I will go with this:Many clients like to deal with a consultant who has time to take care of them, which is how small shops have always gotten plenty of work. The market is HUGE, varied, and open to innovation. :) yup - plenty of room

rcjordan
03-15-2005, 10:37 AM
>Hasn't "the root" always been to make a direct connection between the consumer and the offer - the seeker & the information?

Yes, but to perhaps twist the intent of your post a bit, there has also been a long history of cutting out the middleman, of streamlining the path. Do I think that SEM/SEO will disappear within 5 years? No. Do I think that within 5 years we'll also be seeing the emergence of a cable-channel-like internet for the masses that will be chock full of PFI opportunities? Yes.

rcjordan
03-15-2005, 01:42 PM
Battelle just posted this:

http://battellemedia.com/archives/001323.php

Where's the SEM?

Chris Boggs
03-15-2005, 04:04 PM
The SEM process will exist 3 years from now. Agencies will have SEM/SEO departments, and IMO that means that even if all the non-agency players are gone the process still exists. I also agree that SEO will cost more and more, and the value of a marketing education will help more and more in increasing ROI from paid search.

Nothing's going anywhere anytime soon...

jrothcbs
03-15-2005, 04:22 PM
While this has been a very lively and thought provoking discussion, the original comment was a misquote of Jay MacDonald by Mediaweek (please see the link below).

Search Engine Lowdown - Misquoted "Analyst" Believes Search Optimization Has Long Future

http://www.searchenginelowdown.com/2005/03/misquoted-analyst-believes-search.html

MacDonald believes that "as [search optimization] technology improves, it will have a far greater role, in a positive way". He also believes that search optimization will be around for "many years to come".
rustybrick added the quote

St0n3y
03-15-2005, 04:29 PM
I wonder then what he meant by "Their business won’t exist in three years."

Mike Grehan
03-15-2005, 05:52 PM
So I think there's always a role for someone who understands how to influence those unpaid results, in the same way we always have a role for PR people. They can't guarantee coverage, but they may be able to help. And getting that coverage is literally something you can't buy from the search engines/media direct, plus the value is enormous because unlike an ad, it's a search engines stamp of approval that you should be among their top unpaid listings.

The words "nail" and "head" spring to mind here, Danny. I couldn't agree with you more. Even someone who is as cynical as I can frequently be about this industry, knows it isn't going to fade away in a few years just because the technology will get better.

Although, it might well be the architect of its own demise if the technology *doesn't* get better!

The industry has been rather fragmented so consolidation is due. And whether that is just a flurry of buy-outs/buy-ins to begin with, I believe it will lead to a natural and gradual convergence.

Having been around in the marketing world for eons, I remember the emergence of "database marketing" (direct marketing as it would become). Yes, this was the advent of the death of above-the-line marketing. The power of some computer geeks, postcodes and mailboxes would defeat TV, radio and press. It was accountable. It was cheaper. And it was... presumptuous, in fact.

After the analysts filled the pages of the industry rags about this technological revolution and these new industry upstarts, there was the expected flurry of buy-outs/buy-ins... And then the wake of "junk mail" and privacy issues and data protection threatened its very existence in the mix for a while.

Look at the offline marketing industry now. The creative shops and the media buyers and the direct agencies are all frequently working together on the same account.

"As technology improves, the need for optimization will go away" said Jay McDonald in the referenced article in this thread. You know, I actually laughed when I read that. Whatever underlying technology a search engine uses it still has the "abundance problem" to deal with. So there's always going to be a zillion potential candidates for certain popular queries.

No matter how granular and refined the results become, the end user is still only going to look at a few of them. Just as they do now, regardless of the way they're presented.

So personally, I think I'll pretty much be keeping an ear to the ground and remain as aware as I possibly can of what can be done to help influence my clients into those primary positions.

Optimisation may be an entirely different art in the coming years. But if I have quality material which suits the end users' information needs, then I'll certainly be using whatever skills are required to ensure that a search engine knows about it.

And, as you say Danny, just like a good PR agency can pull the rabbit out of the hat and get you that front page coverage from time-to-time; in the same way, I think I'll still be getting paid for doing similar in search.

I wrote yesterday that search engines wouldn't reach for the Kleenex if the industry fell off a cliff. I should have qualified that a bit more by adding: they'd only cry about the lack of qualified leads for a spend over five grand each month which, by the way accounts are set up, we're forced to provide them details of.

I've seen a lot about the deals and mergers going on in the industry, like the iProspect deal, for instance. And people involved in that are talking about search engine optimisation being the rocket science of online marketing. In my opinion, it's a completely preposterous claim.

Classic SEO (as it could be referred to)is child's play. Absolutely anyone can do it. It's just about getting a few HTML tags in order and getting linked. It's not even about a computer language, just a mark-up code. And PPC is not more difficult in its application. Common sense prevails. Neither of these skills relies on MENSA membership or a university degree.

But there again, dry cleaning is not difficult, but we do tend to get a professional service to do it on our behalf.

And beyond creative, most of what happens in marketing can be done in-house by anyone who is prepared to take an interest and learn it. But in the short history of professional marketing, we've learned, as businessmen, just like our dry cleaning, it's sometimes more effective and economical to farm out those requirements when it's not our core business activity.

Will professional services prevail in this industry and keep it afloat. Of course. For as long as a client needs someone to take care of the stuff that may just shift their focus from what their business is actually about.

There are no exceptional skills or powers required in this industry. But like any service industry, it has dedicated professionals who are prepared to do the stuff that you wouldn't normally do yourself.

Will the industry be around in three years? I'm trying very hard to think of an industry where they don't buy in professional services, in order to conclude...

Misquoted "Analyst" Believes Search Optimization Has Long Future

Quick addition: Long live crisis management in PR :)

Andy AtkinsKruger
03-15-2005, 05:53 PM
The focus in this thread seems to have been a lot on technology. The reason 'agencies' or intermediaries exist between customers and their large suppliers and will continue to exist is because they offer independent specialist expertise -- and more.

So, when I meet with my travel client and plan a strategy with him that comprises both organic and pay per click approaches, we discuss:-


- His call centre load patterns
- His most profitable markets
- Price and service advantages he can offer
- Where his web site needs to be expanded to help organic AND pay per click

Then we come up with a solution - which involves understanding how we can use pay per clicks strategically to compelment his organic strengths.

Now that's maybe what an advertising agency does, it's certainly about PEOPLE rather than TECHNOLOGY but we're definitely search marketers.

And I think that some advertising agencies will disappear because they don't recognise the change (like the railways didn't start up airlines), some will buy search marketers become very good at it and survive and GET THIS some search marketing firms will become advertising agencies even going into print and direct marketing techniques (but integrating with online).

So watch out ad agencies -- we're on our way....

backbone
03-15-2005, 07:11 PM
Common sense prevails.

The question should be... Will SEM exist 300 years from now? At the 2004 SES in NY, Danny moderated a roundtable session called “The Future of Search”. Craig Silverstein of Google gave his vision that in 300 years search engines will be more like yeast based search pets that understand our emotions and inferences. How will SEO’s optimize for that? We’ll do emotion and inference research with tools like DesireTracker and come up with strategies that will help our clients be relevant and achieve top yeast listings.

I wrote an article about this. It’s a year old but still relevant to this discussion.

What is the Future of Search? by Stephen Turcotte (http://www.backbonemedia.com/futureofsearch.asp)

Mike Grehan
03-15-2005, 07:25 PM
The question should be... Will SEM exist 300 years from now? At the 2004 SES in NY, Danny moderated a roundtable session called “The Future of Search”. Craig Silverstein of Google gave his vision that in 300 years search engines will be more like yeast based search pets that understand our emotions and inferences. How will SEO’s optimize for that? We’ll do emotion and inference research with tools like DesireTracker and come up with strategies that will help our clients be relevant and achieve top yeast listings.

I wrote an article about this. It’s a year old but still relevant to this discussion.

What is the Future of Search? by Stephen Turcotte (http://www.backbonemedia.com/futureofsearch.asp)


Interesting, Stephen,

But I note that Craig doesn't seem to have mentioned where this information will be coming from. Even though we emotionally desire it and our machine should understand it.

I guess if it's a commercial search it comes from people who supply it? And without their input into this - how will our little search pets know where to find it?

MUSCLE13
03-15-2005, 07:52 PM
"As technology improves, the need for optimization will go away" said Jay McDonald in the referenced article in this thread. You know, I actually laughed when I read that.

That quote right there (from Mike not from Jay) absolutely makes me think that the SEM industry will consolidate into only a few winners and may have a problem existing outside of the traditional ad agencies in a few years. Its exactly the same attitude that existed in the dot com bubble. Impervious. As an outsider, you can just feel it in these forums.

andrewgoodman
03-15-2005, 09:31 PM
The total US advertising industry spend is over $250 billion per year and growing. Pretty HUGE. How many traditional media ad agencies are left after consolidation? Why won't the same happen in SEM? Consolidation is inevitable. Only a few will win.
Actually, there are new niche players popping up all over the place. Some agency functions are being outsourced. Profit margins being squeezed. Whole different paradigms (search, for example) interfering with business as usual.

The notion that consolidation is inevitable reads like almost a Marxian teleology. It leaves out a lot of the fine detail. Schumpeter had a nasty little phrase called creative destruction. The sanguine view is that out of the ashes of consolidation comes new growth in new areas the big guys don't get.

You can consolidate anything, roll up anything. Funeral homes. Golf course conglomerates. Junk removal. You name it. Sometimes the financial markets support these rollups. Sometimes they blow up but good.

Yes, Wal-Mart put local hardware stores out of business.

But the health of the hundreds of small to midsized web shops of various stripes that I come across does not worry me. Why? Because they are nimble and have good ideas. If they stop making money, they close up shop.

The big rollups of web services and other web consulting in the late 1990's did not kill all small shops. In fact, giants like USWeb/CKS imploded. What does that teach us?

You need to look more closely at the details.

Mike Grehan
03-15-2005, 09:31 PM
That quote right there (from Mike not from Jay) absolutely makes me think that the SEM industry will consolidate into only a few winners and may have a problem existing outside of the traditional ad agencies in a few years. Its exactly the same attitude that existed in the dot com bubble. Impervious. As an outsider, you can just feel it in these forums.

There are huge advertising agencies who seemed to assume that they would be 'full service' everything in every medium. And they were wrong. The 'would be' full service agencies that didn't have a printing press downstairs, so never had to pay the printer, mark it up and sell it to the advertiser...?

Not only that: they would have a full production company upstairs for their radio and TV ad's - and other downstairs people would be preparing their trade show for free. Putting it all in the van, agreeing floor space, water pipe, electricals... in fact everything...and also mastering their search marketing stuff...

Think again.

andrewgoodman
03-15-2005, 09:40 PM
Honestly I don't think one of you SEM guys has ever listened to a quarterly earnings conference call from a search engine company. Do you guys ever research at all??? It reminds of the the old dot com days. Just my opinion

Anyway- Really simple, Just for an example - Lets say the search engine charges 70 cents and the advertiser pays $1.00 to the SEM guy who goes and buys the inventory from the search engine for 70 cents. If the advertiser is willing to pay a dollar and the search engine is only getting 70 cents of that you guys don't think that search engines are going to work like crazy to better target the technology so that they can get some of that 30 cents in the middle? Danny you honestly believes margins won't be squeezed in the SEM business???
Let me spell it out real simple for you. They *have* been trying to squeeze us for the past 3-4 years, and it hasn't worked. Many will tell you that they will try to enlist Google's or Overture's help with a simple client matter, and the vendor tries to get them to dump the consultant and work directly with them. *It hasn't worked.* The customers keep coming to us.

At this point I am thinking you would probably argue that judges will eventually just deal directly with accused criminals. Cut out the middleman, after all. Why wouldn't they want all those legal fees to themselves? Hmm... anyway... if the shoe fits...

You can go around talking about putting whole classes of people out of work if it's sport for you. Fine and dandy. Who's next? Air traffic control? Who needs 'em? Crossing guards? Losers! Teachers can be replaced by talkin' books.

As for quarterly conference calls from search engines, is this your only fallback? Are you now suggesting that Danny, me, Chris, Mike, you name it, don't do *research*?

DISC
03-16-2005, 10:53 AM
(1) Optimizing the SEO design, code, trusted feeds, and database and server architecture of sites will always require skilled, personal attention that leaves plenty of room for small SEM firms to help in ways that can’t be automated by big shops. (2) SEO copywriting will always be a viable business for small firms because the language content of web sites will always be a factor in search engine positions. Regarding (2), even one-person shops will always be able to help clients with their sites’ language. Regarding (1), the research and technical knowledge required means that one-person shops probably can’t prosper much longer, because such optimization requires at least one skilled web programmer, one skilled web designer, and one SEO writer/keyword researcher. My small firm of 8 people spends about 25 hours per week doing pure research (not counting annual attendance of the SES conference), and we need our diverse client list in order to put our research into practice and learn from the results of that diverse practice.

I agree with Danny Sullivan’s remarks in the evening forum at SES February 2005 that PPC will increasingly need skilled application of PPC management tools, so that PPC consulting will increasingly favor larger SEM firms who have the resources to master such tools. I believe that one- to three-person PPC consultancies have about two years before they will not have the resources to add much value to most PPC campaigns.

Big picture: Language (of web pages, links, and trusted feeds) will always be crucial to SEM, so that small firms with skilled SEO writers who can work with people either in the SEO firm or in the clients’ teams will always be able to add value and thus prosper.

Mikkel deMib Svendsen
03-16-2005, 11:48 AM
DISC, it sounds to me like you are talking about the US market only -outside USA I am not so sure you are right. Here, in the smaller European countries, it is definately not what I see. And, the numbers show that the markets outside the US grows much faster, so soon this is where the majority of the money will be.

RepairGuru
03-16-2005, 03:40 PM
I've been doing our in-house SEM for the past 5 years. We spend several 100k in PPC each year. We have very good organic listings and use software tools to help us manage both. Even so...

In my opinion there will always be a huge market for SEM'ers.

While we do our own in-house, I've hired several different SEM firms over the years to help us in various ways. We'd still be working with a couple of them now but they did not provide a very high level of customer service. Like any business, the ones that will survive will be the ones that provide the best service/value combination.

My nits? SEM'ers that aren't willing to put their money where their marketing rhetoric is. In this day of incredibly detailed tracking it's not satisfactory to me if a SEM'er won't give me guarantees of some kind. You should be willing to look at what we're doing, figure out what value you can add, and be willing to guarantee your efforts will equal that value. Most SEM'ers I've talked with over the years want to get paid in spite of the results they can produce.

Back on point, SEM is here to stay and will expand over the years rather than contract as some seem to think. In order for the market to contract we'd have to see a shift away from ecommerce, not very likely. And, because the field is so complex it's not practical for most companies to have dedicated in-house SEM'ers. Even if they did those companies frequently need outside help for various needs.

I do think that SEM will not remain very viable as a stand-alone marketing enterprise. (maybe that's what is meant in this thread). I agree with those at the SES conference that SEM is just a part of a company's overall marketing strategy and should be rolled up into the overall marketing plan.

I also see opportunity for specialized SEM. If some SEM's became experts at one SE they might have a better chance at success. Right now I would like some help with our Yahoo strategy but I can't seem to find anyone interested in helping us tackle just that one area.

Just a few thoughts...

andrewgoodman
03-17-2005, 01:30 AM
(1) Optimizing the SEO design, code, trusted feeds, and database and server architecture of sites will always require skilled, personal attention that leaves plenty of room for small SEM firms to help in ways that can’t be automated by big shops. (2) SEO copywriting will always be a viable business for small firms because the language content of web sites will always be a factor in search engine positions. Regarding (2), even one-person shops will always be able to help clients with their sites’ language. Regarding (1), the research and technical knowledge required means that one-person shops probably can’t prosper much longer, because such optimization requires at least one skilled web programmer, one skilled web designer, and one SEO writer/keyword researcher. My small firm of 8 people spends about 25 hours per week doing pure research (not counting annual attendance of the SES conference), and we need our diverse client list in order to put our research into practice and learn from the results of that diverse practice.

I agree with Danny Sullivan’s remarks in the evening forum at SES February 2005 that PPC will increasingly need skilled application of PPC management tools, so that PPC consulting will increasingly favor larger SEM firms who have the resources to master such tools. I believe that one- to three-person PPC consultancies have about two years before they will not have the resources to add much value to most PPC campaigns.

Big picture: Language (of web pages, links, and trusted feeds) will always be crucial to SEM, so that small firms with skilled SEO writers who can work with people either in the SEO firm or in the clients’ teams will always be able to add value and thus prosper.


Again with putting people out of business (but not yourself)!

Maybe there is more to someone else's business than you are willing to see. I know a number of one, two, three person shops doing PPC. The fact is they'll probably grow. But do they need to? Will they go out of business? I really don't see why.

I'm not quite sure what all this research is that you're referring to in relation to your own business, but surely that would get us off topic.

Most though not all of the skills (as Mike G. pointed out) in SEM are not so earth-shattering, so allow me to throw a curveball. The biggest skill in any agency-dominated business, one that is consolidating, etc., is getting clients. Not research, or web dev, or any of the hard stuff that needs doing. It's getting clients!

If that small shop isn't getting the better clients because of consolidation, then they either go to work for a bigger shop, or work for smaller clients.

But what would you say if some of these actually had the skill of getting clients in spite of their tininess? What is stopping a three-person shop from making effective use of technology to do a great job for a small but valued client list?

Life is a mystery sometimes, isn't it? The people you write off usually don't go quietly. Some of them prosper. As such this can be tautological, because once they prosper, they usually grow. But not always.

DISC
03-17-2005, 09:44 AM
Maybe there is more to someone else's business than you are willing to see. I know a number of one, two, three person shops doing PPC. The fact is they'll probably grow. But do they need to? Will they go out of business? I really don't see why.

I'm not quite sure what all this research is that you're referring to in relation to your own business, but surely that would get us off topic.

Most though not all of the skills (as Mike G. pointed out) in SEM are not so earth-shattering, so allow me to throw a curveball. The biggest skill in any agency-dominated business, one that is consolidating, etc., is getting clients. Not research, or web dev, or any of the hard stuff that needs doing. It's getting clients!



Hi Andrew,

Actually, I would be delighted to be wrong about one, two or three person PPC shops becoming unable to add value (which doesn't neccesarily mean they would go out of business, but increases their chances of doing so). Do you think that a one person PPC firm will be able to add enough value to PPC campaigns for the foreseable future that the firm will be able to live off a reasonable percentage of the increased revenue they bring their clients?

Though this is off topic and worthy of another thread, I do no marketing, (beyond fielding RFPs), no PPC, and have not SEO'd our own site, and I'm having to turn away some business (though I'm still courting the best prospects). I've been thinking that with the rapid growth of this industry, my firm's experience of excessive demand is happenning with most of the reasonably established SEM firms out there. I would be curious to here more about this from my peers.

Regarding my firm's research, it covers all the changes in the SEs, like LSI, Hilltop, the new MSN, shopping search trusted feeds, SEO tools, PageRank (or equivalent) circulation in large dynamic sites, relative importance of links vs. on-page elements, PPC tactics and managemnet tools, books on web analytics and web copy writing, usability and conversion rate tactics, etc., etc.

Speaking of research, when is you PPC book coming out? I pre-ordered at Amazon, but no word from them yet.

Best Reagrds,

~Rob Laporte, CEO, DISC

DISC
03-17-2005, 10:07 AM
My nits? SEM'ers that aren't willing to put their money where their marketing rhetoric is. In this day of incredibly detailed tracking it's not satisfactory to me if a SEM'er won't give me guarantees of some kind. You should be willing to look at what we're doing, figure out what value you can add, and be willing to guarantee your efforts will equal that value. Most SEM'ers I've talked with over the years want to get paid in spite of the results they can produce.


There was an excellent thread on guarantees in this forum, at http://forums.searchenginewatch.com/showthread.php?threadid=1429

I agree that often an SEM firm should assess likely results before doing a job. In some cases, it's obvious that the prospect will receive excellent ROI, because their site is replete with SEO problems, so that spending a lot of time determining how worthwhile SEO would be is moot, and the prospect is already sure they need help. But sometimes, and more frequently for my firm these days, the prospect has pretty good SEO tactics in place already and lots of good positions, in which case I propose a feasibility report. That report cost money ($1000 to $2250 at 2disc.com), yet it helps determine whether SEO is worth doing and how much and in what order. I have had some prospects expect me to do this kind of feasibility report as part of a proposal, and I had to explain that such work is valuable, time-consuming, and must be billed. Most prospects understand this, and the ones that don't move on, saving me time and money I can devote to other clients and prospects (ah, the freedom of a post-feudal economy!). However, I do think that a great way for a new SEO firm to land new accounts is to offer this kind of study for free, as long as they don't get their books into red ink doing so. If an SEO firm does not remain financially solvent, ultimately clients get hurt, and the SEO industry gets another smudge.

excell
03-17-2005, 10:22 AM
Disc has some very interesting points and thoughts and obviously some experience. I think that for the many people that want to enter this industry as stand alone experts covering only one aspect they either need to be extremely good at what they do or very good communicators or they will not fit. Equally so of small all rounders - they need to be very good to survive or else client expectations will move their customers onwards and upwards.

Client expectations once satisfied will keep you in business no matter what happens around you.

andrewgoodman
03-17-2005, 07:24 PM
Hi Andrew,

Speaking of research, when is you PPC book coming out? I pre-ordered at Amazon, but no word from them yet.

Best Reagrds,

~Rob Laporte, CEO, DISC

Soon. But the actual date is not mine to set unfortunately. A combination of a big delay in the middle of the project (acquisitions editor leaving, corporate reorganization, possible cold feet) at the publisher's end, combined with my inexperience as a first-time author, and me being too busy posting on this forum, talking to clients, and whooping it up at SES, led the project to be pushed well back from the initial projected completion date.

Only a few more words to be edited and a couple of screen shots to be cropped and we're ready to roll it out, but again, I stress, the exact date is their decision.

On that note, back to work.

xan
03-21-2005, 06:05 AM
Hey all,

I also noticed the forrester report, and wrote about it on Search Science (http://spaces.msn.com/members/search-science)

I found it interesting, and had a sniff about to see what else was being said about it.

A quote I couldn't help including was:

"If your experiment needs statistics, you ought to have done a better experiment."
Ernest Rutherford

precession
05-05-2006, 08:01 PM
. . . and another year wiser.

Just joined this site recently and enjoyed this thread, but am left asking, what do all the contributors have to say now that a year has passed. Not to regurgitate what was said, but does anyone have any notes to add to the positions and informations posted?

Also, has Mr. Goodman made his book available yet?
If so, how do I come by it?

andrewgoodman
05-12-2006, 06:41 PM
Hi Precession,

My opinion on this hasn't changed a whit. Mike Grehan alluded to the big agencies, how it's they that have been under pressure over the past decade.

Consolidation happens - I know that. But it's not a wipeout for the little guy.

Looking at the trends in marketing and advertising, there are some very interesting ones. There are huge agencies under pressure. There are boutique shops of 10, 20, and 100 people who have done very well. Indeed, there are a number of holding companies that do nothing but take stakes in such firms, and let them keep doing their thing without interference.

There's a difference between a holding company that owns 100 boutique agencies and lets them continue to run independently, and a mammoth agency that tries to knit everything together under a single "umbrella". Those small agencies are the driving force behind growth and innovation, which is why there is so much interest in letting them run in the way they are accustomed (even after gaining some funding or selling most of the equity, even).

Certainly, joining forces with a larger entity may save a small firm from extinction. That doesn't mean all the small firms will be wiped out, however.

The general principle of today's fast-moving economy is - specialists can thrive, and I know plenty of even one-person shops who stubbornly refuse to change (and so do their clients).

The book you refer to came out in September. Type "Winning Results" into Amazon. (Matt Cutts gave it a nice review today.)

Wilksy
05-22-2006, 09:50 AM
As an SEO, I hope not :p

Let Click Fraud destroy the whole SEM/PPC model, then you all will need some help and decent ROI.

It's like any aspect of search, the more it grow's, becomes complex and obscure the more niche and profitable it will become.

I wouldn't listen to analysts, unless they are managing large PPC spends and keeping their finger firmly on the SEM pulse.

jag
05-22-2006, 10:06 AM
As long as G is there SEM/SEO will be there :)

and more over if there is a website SEM will be there...

why so much if there is internet SEM will exist ;)

There may be down on SEM/SEO but its can't break

Cheers
-JAG

BKCB
08-25-2006, 06:58 PM
I'm curious if anyone else is interested in an update to all the good responses that were given to the orginal 3/14/05 post and question based on this dubious article: "Search-Specific Agencies Fight for Survival"?
http://www.mediaweek.com/mw/news/recent_display.jsp?vnu_content_id=1000837282

I liked Mike Grehan's comment of "Optimisation may be an entirely different art in the coming years. But if I have quality material which suits the end users' information needs, then I'll certainly be using whatever skills are required to ensure that a search engine knows about it."

Search Marketing will always be around, IMO, but advanced future technology, as well as personalization, verticalization, mobilization, and socialization with user generated content will make it "an entirely different art".

This 8/22/06 article "Search Engine Marketing Services: Trends and Predictions" by Scott Buresh: ( http://www.searchengineguide.com/buresh/2006/0822_sb1.html ) brings up the point of "Continued Reluctance from Agencies to Pursue Search Marketing". I disagree with Scott about the degree of fear that small (one man traditional agency shops), medium, and large agencies have about "accountability and metrics" as I've dealt with many of them for 20 years. Many of these traditional agencies have been through a lot of revenue loss and need to adjust to what their clients are now demanding. That is, accuountability through precise metrics, and an improved compensation plan that shares the risks more evenly backed up by accountable metrics.

Here is most of my response to Scott's article: "I see a window of opportunity for search mktg. firms that are on top of the curve to not only deal with the old "Black Hat-WhiteHat" issues, but to come up with a way to avoid the all too common problem of "recycled SEO clients". While proper client education is still a major challenge for both buyer and seller, coming up with a truly fair to both sides compensation plan that more equally shares the unavoidable risks of SEO is the ONLY way to go, IMO. Most honest SEO's I've spoken to say that they admit that while both buyer and seller don't control the search engines, right now, the packaged SEO pricing or the hourly rate SEO pricing results in the SEO client taking on most of the financial risk. The SEO P4P compensation plans (disclaimer - that I know of currently), are not fair to the client, IMO, as they practically want to wind up owning part of the client's business without sharing in ALL the risks the client has to begin with.

Traditional Ad Agencies are now focusing on achieving more accountability by using new metrics that even provide accountability for "branding" TV commercials. Why? Because all the members of the ANA are focused on it. If you don't believe me read this = http://www.brokerblogger.com/brokerb...ktg_is_ou.html . I also reccommend you read the relatively new Association of National Advertisers (ANA) blog as Search Marketing has a friend there by the name of Will Waugh = http://ana.blogs.com/maestros/2006/0...wer_of_se.html

Also, I recently posted a comment on Forrester's Marketing Blog when their main analyst, Peter Kim, said this in his post: "My next big piece will be related - Reinventing the Agency. Please don't hesitate to get in touch if you have thoughts on the subject and would like to be included in the research." I brought up about "..accountability through some kind of Pay For Performance compensation option." He responded: "I think we will see the compensation models changing as the agency-client relationship evolves. For some glimpses into the future, check out Crispin Porter + Bogusky's arrangement with Haggar or General Mills with Campbell Mithun and Saatchi & Saatchi.
Search will certainly gain greater importance as agencies integrate traditional and digital approaches. But new agencies will have to learn some old tricks, too - building a compelling brand is different than trying to reverse engineer a search algorithm. We'll end up meeting somewhere in the middle." I'm sure Peter Kim has his finger on the pulse of the traditional ad agency business. I'm not so sure if that can be said about his knowledge of the SEO business. Also, P&G (an ANA member) has negotiated some form of P4P compenstion for years with their ad agencies, Peter imformed me of others (See = http://blogs.forrester.com/marketing...mment-20008795 )

I'm for the long term successful growth of the search marketing industry, but I'm also concerned that too many high integrity SEO's will miss this current window of opportunity, and their role will be one of acquisition target (maybe some have that as their goal?) or a contracted out partner to the traditional ad agency's relationship with the client, or hired as an employee of the ad agency. I prefer to see as many independent SEO businesses as possible as it is better for the client and the USA, IMO.

I'm sure you won't believe me when I say I have no self-serving agenda (financial or ego) when I point you towards the key post (of 23 from 12/11/05 to 2/22/06) that I did on SEO P4P (Actions vs. Sales). It is part of a generic "formula" to come up with a fair to buyer and seller "Pay For Actions" SEO compensation plan. It is based on what the SEO would normally charge in their first year of service, as well as letting the SEO control the implementation of all on page changes, as long as they did not change the overall corporate branding direction for the client (anything in question should be worked out up front). When succesful, this general concept definitely would create less "Recycled Clients"."

I did those posts because I always disliked people who would complain about things without trying, at least, to come up with a solution to the challenge. My concept is not totally refined, but it may be a starting point for a smarter person than I to improve upon.

http://www.brokerblogger.com/brokerb...ce_2.html#more

SEMBasics
08-26-2006, 09:18 PM
I haven't read all 55 posts, so I apologize is someone has already said this:

The search engines are constantly changing and are getting more and more sophisticated. This, I belive, has two ramnifications:

1) It keeps SEO companies in business as they are the one's who stay on top of the search engines.

2) It will limit the number of SEO companies because it will become harder and harder to provide marketable results for clients.

However, so long as the search engines are around there will be a need for companies which specialize in marketing sites for those search engines.

BKCB
08-27-2006, 06:49 PM
Mike Grehan also said "There are no exceptional skills or powers required in this industry. But like any service industry, it has dedicated professionals who are prepared to do the stuff that you wouldn't normally do yourself."

Not being an SEO myself, I tend to disagree as to the definition of "exceptional skills". I do admire the inspiration, and perspiration that it takes to keep up with the ever changing SE's and with all the many trends like "Social Search" that affect how hard it is "to provide marketable results for clients."

The purist SEO's, however, are not the only ones who can stay on top of the search engines. When all those small, medium and large traditional ad agencies fully wake up, and get humble enough (biggest challenge, IMO), to learn SEO or at least negotiate acquisitions/partnerships properly with a good knowledge of search marketing terminology, then you may begin to see that window of opportunity, I mentioned previously, closing for the independent SEM's, IMO.

Again, I don't want that to happen! But, big changes are happening right now with traditional ad agencies in many ways as evidenced in the President of the ANA's ( http://www.ana.net/about/members/members.htm ) 4/17/06 blog post ( http://ana.blogs.com/liodice/2006/04/an_open_letter_.html ) when Bob Liodice ( http://www.ana.net/about/ceo/ceo.htm ) said "At the ANA we are clearly seeing marketers take a far more proactive role in improving agency management. Why? Because they see their agency partnerships as among the largest and most important investments in marketing communications. This view is driving their search for a more balanced and effective agency roster, a fresh look at alternative agency compensation models, the creation of better measurement and accountability tools and the involvement of corporate procurement departments."

Mikkel deMib Svendsen
08-27-2006, 07:03 PM
People have warned about the big agency taking over all SEO and SEM for years - since the 90's. So far it haven't happened and I doubt it will anytime soon.

Sure, the large agencies can handle Paid Placement and a lot of other paid services to some degree. However, if you are playing in a very competitive market you will often still gain better results with the more geeky, smaller, SEO/SEM companies or individuals.

And when it comes to organic SEO there are at least two things that makes it very difficult for traditional agencies to dominate: The broad skill sets it takes and the ever changing nature of the work.

It's really hard to get the right serach geeks on board - basically because anyone that are really good at SEO can make much more money than most jobs offer. And real search-geeks also tend to enjoy the freedom of working on their won - or in very small companies. You can off course do ok SEO with less skilled people on staff ut if you have clients in very competitive areas or clients with very complex web-operations you do need the true serach-geeks around!

And, with the rapid and ever changing nature of SEO larger agencies thend to have a hard time keeping up. They like strategies and templated recomandations that can be re-used for a long time - not a business like this, where everything changes so fast.

So all in all - I don't feel threatened at all by large agencies :)

BKCB
08-27-2006, 07:38 PM
Mikkel, from what I've read of your entrepreneural background and current success, I don't think you'll ever have to worry about large agencies. You'll do fine no matter what.

It's general overall trends that affect many other SEO's and the entire industry that I'm talking about. There will always be exceptions to the rule. However, when the 370 members of the ANA are united in the goals outlined by their president, maybe the time for egotistical ad agency attitudes to change has finally come? If it has, the ad agencies will have to listen as P&G has already demonstrated is possible and attainable with their ad agencies.

You're right, this won't happen overnight (I give it 2 to 7 years for the "window"), but new technology like AD-Id ( https://www.ad-id.org/help/help_detailNEW.cfm ) is laying a digital foundation for all media. Check out this testiomonial about it:

""Ad-ID is important for all of us. It is the first system to provide a digital identification standard for advertising assets�be they TV commercials, radio spots, print ads, internet ads, out of home or FSI's. It is a technological breakthrough that is improving communications, supporting ROI efforts and facilitating our industry's accountability. If you are not using Ad-ID, please start today."
-Renetta McCann, CEO, Starcom Mediavest Group"
http://www.smvgroup.com/brand_power.asp?title=about

Marcia
08-27-2006, 07:46 PM
That's all advertising, there is nothing related to SEO there.

There is really a lot of muddied-up confusion caused by use of the term SEM, blurring the lines between SEM=paid advertising as parlance in some corners, and SEO=organic search. When the two get bundled up the differences get fuzzed.

jjspirko
08-28-2006, 11:52 AM
There are several reasons that not everyone is going to get gobbled up

1. The very best SEO/SEM people don't work for or in or even own agencies. They work for themselves. Those who can gain rank for competitive terms can make six figures with programs like adsense alone let alone what can be done with some affiliate marketing etc. It is the nature of this industry for the best people to pay for some outsourcing, hire a few out taskers and run their own show. Many don't even need to go that far. SEO is so democratic that a bidding war for any good ones to move in house has a long time to run before it even out.

2. There are over a BILLION niches out there to exploit. Did you know in the late 1800s a proposal was made to the effect of closing the US Patent Office for the reason that, "nothing new remained to be invented"? This strikes me the same way. Agencies face for of a threat from those willing to work for a salary being hired in house then via consolidation or the overall need "going away".

3. Technology will never replace good SEM. If it were ever altered to work the Search Engines and other traffic sources would adjust to render said technology ineffective.

4. SEM is not just about rank and traffic it is about conversion and that means so much once the traffic is on the site. The fundementals of marketing are so key on that end that there will always be a need for experts in that respect.

5. The tone is that all the ad agencies are already consolidated and SEM is next. This is just fales there are hundreds of ad agencies in the US today. Many specialized in specific niches or specific markets. SOUND LIKE ANYTHING ELSE YOU KNOW ABOUT?

6. Every day some new way to generate and control traffic is dreamed up and rolled out. Things like, Digg, Diigo, MySpace, Facebook, Youtube, GoogleVideo and a million more. SEM is not just about ranking for or buying some terms it is full utilization of the Internet to increase business and generate revenue.

The orginal article is just typical tripe spilled out but the uninformed as his latest buzz topic,

Jack Spirko

BKCB
08-28-2006, 07:22 PM
For sure, NOT EVERYONE is going to be gobbled up. In fact I hope as few as possible do get gobbled up by traditional ad agencies. I posted this comment on the President (Bob Liodice) of the ANA's blog: "While many (tradidtional) agencies are "rethinking" their value equation now by trying to start, enhance, or acquire Interactive departments, some still don't get how unique and specialized the "10 year old" Search Marketing Industry is."
http://ana.blogs.com/liodice/2006/04/an_open_letter_.html#comment-16326347

Bob Liodice said in that same post: "I was actually quite pleased that you cited my remarks that appeared in Ad Week. In that interview, I supported the growing trend for marketers to use multiple agencies, as I strongly believe this practice optimizes all aspects of brand management – including strategic, creative and tactical development – in today’s increasingly complex marketing environment." I'm hoping he's including Search Marketing Agencies in that mix (especially the SEO's).
http://ana.blogs.com/liodice/2006/04/an_open_letter_.html

I guess after 20 years of difficult dealing with elitist, egotistical ad agencies as an intermediary between a buyer's guide and our common client, I never could believe how clients accepted so much BS from them because of their supposed holistic marketing approach. While some had bad reputations (they changed names and reopened), most had good ones. My concern is that the Search Marketing Industry is too often misunderstood at best; labeled with a poor reputation at worst. While that misperception is changing slowly, I'm glad that Will Waugh of the ANA Marketing Maestros blog is posting things to help: "The Power of Search".
http://ana.blogs.com/maestros/2006/08/the_power_of_se.html