Dan Perry

Dave Pasternack wrote a MediaPost column today that outlines his opinion of why the “In-House vs. outsourced SEM” debate is ridiculous. It’s not surprising that he’s taking the side of agency, because that’s where his paycheck comes from. I wouldn’t expect a non-biased opinion from someone in Dave’s position, but I do think there are a few points he makes that are up for debate. Dave discusses four possibilities as to why this debate continues.

Possibility 1: Maybe SEM agencies really don’t have a clue.
Although a generalization, I think this argument is valid. I also think that internal expectations may be too high, and thus a bad view of the agency is created. Is this the agency’s fault for not setting expectations? Perhaps, but for the most part, no problem here.

Possibility 2: Maybe search budgets are too small to care about.
Great point here. Although more and more companies are coming online, and dipping their toes in the SEM space, it’s still a pittance for most companies.

Possibility 3: Maybe everybody in the business has drunk too much Google Kool-Aid.
This is true to a point, but I think those companies that are a little more advanced have noticed Google for what it really is; The new Microsoft, with a better product, and better PR. The difference is that Google is still looked at as cool by the masses, and Microsoft never was. In the end, Google will have far more data than Microsoft ever had. Two thumbs up for PR.

Possibility 4: Maybe it’s impossible to evaluate search performance.
This point seems like Dave may have been looking to ad a fourth bullet, without really making a point. On a side note, love the opening dig: “In-house mediocrity vs. outsourced excellence”. Didn’t the first bullet say SEM agencies don’t have a clue? Doesn’t he work for an SEM agency? How did we go from not having a clue to excellence in a few bullet points? Please leave the response in the comments.

I think the mature online marketing companies are pulling SEM internally for a number of reasons, but first let’s discuss what I mean by “mature”. I’d define it as a company that’s tried it in-house (and probably failed), outsourced it to an agency or two and seen better results, but over that period of time, have noticed the fee becoming a bigger and bigger part of the SEM program. At some point, the VP of Finance sees that fee, and decides they could probably do it internally for less. The reality is that maybe they can and maybe they can’t, and it may take some time to get their sea legs, but it is possible they can do it as well as an agency.

Even though most agencies don’t have a clue (Dave’s words), a lot of individuals at agencies do, and are willing (or already have) made the switch to in-house. Couple that with the legal value of having internal folks managing it (although more important to affiliate SEM than agency SEM, but still valid), as well as the removal of the monthly maintenance fee (or % of spend, or whatever the model), and it’s pretty clear this is the direction the industry is headed.

As companies mature in the SEM space, the natural progression is to pull it in-house. It’s better from a budgeting standpoint and from a legal standpoint, plus you don’t have that painful monthly fee. Finally, in-house folks have a vested interest in succeeding, as it may be tied to their bonus, or it may just be job security.

For all the mud that Dave has slung at our community, I personally think he works for one of the better agencies out there. Kevin Lee (Co-founder of Did It) and I were on the Board of SEMPO together, and I’ve never had a conversation with him and not learned from it.

I wouldn’t expect Dave’s opinion to go against his business model. I do however, feel that it is flawed, and someone from the other side of the fence needed to speak up.

In the end, I think more and more companies will transition their SEM in-house. From where I sit (in-house for > 5 years, SEMPO in-house committee, etc.) it’s a natural transition I’ve seen time and time again, and I don’t expect it to end anytime soon.