In-house vs. Agency SEM - My take
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.
June 23rd, 2008 at 11:14 pm
I have been working in-house for a 150m company for over a year, handling all SEM responsibilities.
My company not only has an on-site, full-time SEM professional, but when I am needed to wear other ‘hats’ I am ready and willing to help out wherever that need may arise. I may be assisting with some ad buying, developing strategic partnerships, or even assisting customers. Point being, as an in-house I rub elbows with the CEO down to my Director of Marketing and I can offer much, much more to this company than if they were to outsource their sem services to a pay for service boutique agency.
Without living, breathing, and really understanding how a company works inside and out, how can you offer such a personalized service? Working on-site and in-house seems to me the most effective move for this company, financially and strategically.
June 23rd, 2008 at 11:15 pm
So….where are those recommended reads for a good old in-house??
June 23rd, 2008 at 11:17 pm
@Mike B: Thanks for responding. As for the in-house reads, that’s another post all together, but it’s at the top of the list!
June 24th, 2008 at 1:57 am
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June 24th, 2008 at 2:16 am
It’s important to note that Dave Pasternack works for an agency. Biased?
“It is difficult to get a man to understand something, when his job depends on his not understanding it.”
- Upton Sinclair
When I worked for Disney Parks and Resorts we had some accounts managed through one of the largest dedicated SEM agencies and others managed in-house. Our major metric was the ROI …and our in-house campaigns generated a much better ROI than those through our agency.
Two years ago I moved to a large media company (which I currently work for) and we move all of our accounts in-house from a different large agency. Being a media company, our primary metric is the page view. Moving our accounts in-house resulted in a 200% - 500% increase in page views, depending on the business unit.
Not only did we get better performance we were able to improve on the agencies reporting. In both cases, we saw the year over year SEM budget increases go from 25% - 50% increases with an agency to 200% - 300% increases while being managed in-house. Pulling our accounts in-house gave us the ability to improve performance and reporting which, in turn, allowed is to show the kind of value that companies want to throw money into.
The problem with Dave is that he lumps everyone into groups based on his bias. In his eyes, everyone in-house sucks and every one at an agency is extremely talented. The reality there are good and bad people in both. It’s important to note that agencies have such a high turnover rate that they are constantly hiring people with little to no SEM experience.
I don’t think it ever occurred to Dave that the type of people moving from in-house to an agency are doing so because they had a “bad” in-house person? Satisfied companies don’t drop their “good” person to go with an agency. In other words, he’s seeing a very small view and thinking it’s the whole universe.
Most shark attacks do occur in three feet of water. Following Dave’s train of thought, he would think that’s where sharks like to eat. Someone with a little common sense would say that it because THAT’S WHERE ALL THE PEOPLE ARE.
June 24th, 2008 at 4:04 am
When a company like GM says they’re shifting ad budget to online and away from traditional mediums, it’s safe to say we’re seeing the future unfold.
Now, given GM’s huge marketing budgets, they alone represent retirement for many-an agency VP.
The trouble is, that large companies can still have problems that need fixing - like GM does. So, at some point, even a company as tied to “agencies of record” as GM is, will skew towards in-house, if for no other reason than they can cut out the agency fees and either roll that money into more advertising directly, or - maybe more likely - use it to prop themselves up with for a bit longer.
Granted, the scales between savings and prop-needed might not exactly keep them upright, but tell a bean-counter there’s 8% to be saved, and rest assured he’ll be off to the nearest pencil sharpener.
Yes, I realize in-house talent costs money - but hey, you’d still need a body to manage the agency relationship, and the cost difference between THAT body and a talented In-House person would be made up in larger-budget agency fee savings, so it is a valid option.
The sad truth with many agencies is this:
They focus on bespoke paid search tools to make the management of millions of keywords easier. No problem there - always room for a better mousetrap.
But if you’re future lies in search, organic is the true long-term “unsalted butter on the fresh corn” - and many agencies today are sorely lacking in deep SEO talent.
Like Dan, I’m a poster-child for Mr. In-House. I also feel that agencies are a very useful tool in a search marketers toolbox. But to try to suggest that agencies have the knowledge and talent and in-house does not…LOL
I’m guessing he smelled link bait after seeing the SEMPO debate from last week.
June 24th, 2008 at 4:07 am
I just dont get his post…have to say if I was looking for an agency to manage my PPC I would not consider Did-it based on David’s mentality. I am looking for a partnership - not a dictatorship.
June 24th, 2008 at 7:28 am
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June 24th, 2008 at 1:25 pm
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June 24th, 2008 at 5:55 pm
Hi Dan! Barry Bowman here:-) What a great thread discussion you’ve started here!!
As you pretty much know Dan, I have been on every side of this coin and believe I can add a lot of perspective here.
I owned my own SEO consulting agency for about 5 years and merged with another company in 2005 who specialized in PPC. We were then considered a full-service Search Engine Marketing agency providing SEO, PPC, Conversion Consulting services and more.
During the dot.com BOOM, the corporation I worked for realized the need for us to be found online. I went to my first Search Engine Strategies conference in 2000 and a huge light bulb turned on for me. What little I did learn, I applied to our company web site with phenomenal results for many tier 1 keyphrases (the good ole’ days). I then went to work for a small medical software company…results were even better since my knowledge had grown. This company went from barely making payroll each month to now being about a $10M company. To this day, they still focus about 90% of their marketing efforts online. I started to gain some outside attention and decided to go out on my own
Fortunately in my case, I had the opportunity to apply my limited knowledge, make mistakes that inevitably will happen as a newbie SEO, and continue to learn while working for someone else. I now have 8 years of that experience under my belt…I’m almost a pioneer in the Search Marketing industry. I’ve worked with Time Warner Cable, Road Runner ISP, Ruby Tuesday, Smart Balance, Hostess Cakes, CDW, Career Education Corporation, and many more.
Sorry for all the details…I’ll get to my point shortly. But, it’s important for a few reasons. 1) There are a lot of so-called ‘SEO Experts’ available these days. And, I know for a fact that many of them have just attended their first SES or SMX conference, read a book or two, they can now speak the language and consider themselves EXPERTS, but nothing could be further from the truth. They may even have a web site or two they’ve ranked well to show you their “proof”. 2) A talented, seasoned SEO professional, can easily make $125k - $250k/yr. depending on many factors…not too many agencies can afford to pay for that sort of talent. 3) Similar to point #1, many who are hired have recently earned a certification from SEMPO, Bruce Clay, Search Engine Workshops (I’ve been through all this training) and again, they are “experts”. 4) Several of the agencies I know of outsource a lot of the work to India, or elsewhere overseas. Not to say there’s not some great overseas talent, but it’s very limited…I know…I’ve done a lot of this sort of outsourcing.
So, in-house vs. outsource to an agency? There will always be the need for agencies to do this sort of work. Most of what I see is limited resources and budgets within a company. And, there are several good agencies to choose from. However, many of the top agencies I know of won’t even speak to you unless you can spend $10k/mo. or more.
For the most part, it makes the most sense to bring this in-house. Even better if you can find a SEM vs. SEO professional, someone who is well versed in both SEO, PPC, Analytics, and more. This is a HUGE function of Marketing and should be integrated as such. The problem with outsourcing is you’ll never obtain the knowledge you need to continue going forward. The Internet isn’t going away anytime in our lifetime! And, you don’t necessarily need to hire the seasoned SEO pro. Hire someone who knows what they’re doing of course, but an intermediate professional is someone you can groom internally. Attach bonuses to performance metrics to keep them motivated towards ROI.
How do the internal SEOs stay up-to-date and trained? Is it worthwhile to send them to a 3-day training course once a year? Maybe. Well, that’s why I’ve left the agency world. I saw a couple years back that this shift was taking place from agencies to bringing the talent in-house. How did I stay abreast of the constant changes in search algorithms, Google slaps, etc. etc.?
I was a subscriber to Planet Ocean’s www.SearchEngineNews.com for 8 years. The are the longest standing source of Search Engine training to-date. They’ve been teaching Search Engine Marketing now since 1997. I now work for them and train others what I know. For more advanced training we have www.seoINsites.com. Both sites are a continual source of SEM education. Our clientele is made up of both agencies and in-house staff. Sorry for what may sound like self-promotion of my company, but I’m often asked, “with all the information that’s online, and most of it contradicting each other, how do you know what you’re supposed to do?” Now you know. Stick with trusthworthy, reliable sources and don’t go chasing the algorithm.
June 25th, 2008 at 8:36 pm
@Barry Bowman: Thanks for the comment. Not a huge fan of the sales pitch at the end, but there was enough value to approve it.
June 26th, 2008 at 2:52 am
You know what really disappointed me about Dave’s post? The fact that he has yet to respond to any comments. I would have hoped that a man in his position, after making such polarizing comments, would have become part of the discussion. However, it is obviously apparent that he is not looking for a discussion but rather gain attention. I am willing to hear anyone opinions on a matter as I never claim to be all knowing - however I lose all respect for someone who just says things for the sake of being heard.
June 26th, 2008 at 3:01 am
@Kieran: His actions speak louder than his words, and in his case, it’s a bad thing.
June 26th, 2008 at 9:12 am
Cool discussion. As an agency SEM Director, I’d add this: For companies that don’t have the budget to pay an in-house person, a qualified agency makes a lot of sense, especially one that charges reasonably and handles those middling size budgets.
I also think that agencies have to work more efficiently to get results because the have less time for each client than an in-house would. That’s not to say that in-house people are less efficient; just that in my business, I have to make sure that we do white-hat things that get the biggest bang for the time spent.
June 27th, 2008 at 6:27 am
I posted the last one, but it doesn’t look like my link made it. SO here it is:
http://img134.imageshack.us/img134/7681/davepasternacksqh8.jpg
July 2nd, 2008 at 7:17 pm
I tend to agree with Brian on this when he says-”For companies that don’t have the budget to pay an in-house person, a qualified agency makes a lot of sense, especially one that charges reasonably and handles those middling size budgets”. Enough said I think.