Ad Agencies & Search

Apr 25, 2006 - 5:24 pm 2 by
Filed Under SES Toronto 2006

The last session of the day, moderated by Danny Sullivan.

Kevin Lee from is up first. When we think about buying search, in comparison to other media is more complicated. Most online and offline media buying is predictable: - IOs that have a fixed price - IOs that generally are delivered - Demographics based on averages but assigned to the publisher or network - Cost per publisher ad unit is high - One keyword has over 7,000 bid permutations in MSN - Thousands of permutations in Google - Many in Yahoo as well - Click quality and profile changes with position, source engine, time of day and week, and competitive landscape.

Action marketing places sort of change things - Limited high value inventory (in demand) - Lack of predictability as to inventory availability - Pricing escalates over time (marketers recognize value and get desperate) - Best inventory zero-sum-game scenario - Unlike other media, search has media urgency

When Do Auction Market Places Work? When... - Media placements can be well defined - Marketers/advertisers know and understand what they are bidding on - All media in the network is of high quality or can be auto-discounted (like Google's smart pricing concept) - There is sufficient scale in the network (Barry Adds: Danny touched on this this morning, with his Time Warner Cable trying to auction off TV spots, read that keynote to understand his points on this).

When they don't work? - When a publisher's inventory has special attributes that can not be defined a network style auction marketplace may leave value on the table -- Media placements could be auctioned off individually (eBay, who is very developer API friendly) -- API driven auctions still feasible - Internal sales channel resistance also can derail an auction marketplace

Future Media May Be Auctioned - Google Yahoo and MSN proved that... -- Valuable, scarce media can be auctioned with high yield -- Auctions make publishers lots of money and a high effective CPM, even if the advertisers is billed a CPC -- Banners, Text, Radio and Print... -- Next TiVo, IP TV, Video Ads - Are traditional media agencies ready to become experts in auction media?

PPC Auctions, Two Types at the Top: - Brilliant Marketers - Total Lunatics - Success Requires figuring out how to either; -- be a brilliant marketer / afford top position -- Deal effectively with the total lunatics

- Search is both media and a by-product, people don't search because it was spontaneous. Something stimulated that search... You need to know what else is going on, what is going on, may drive search behavior. - Marketers are beginning to reach their price limits in search. - Agencies must figure out how to buy the best clicks first - That is why they need better technology -- Segmentation marketing, new metrics...

Search is now more numbers driven, much more than compared to other media. This puts SEMs in a good position as the landscape changes.

Tim Daly from SendTec is next up. He tells a story about his 3 year old daughter, who "knows all about Googling." That tells us what the next generation will be and what agencies need to look at in the future. How has the world changed? From slinky to sony robots (pleo - so cool). We played cops and robbers and kids play play station. TVs were made out of wood, today we have TiVo. Social networking was the boy scouts, and now there are Web sites. Dating was by friends hooking up others on blind dates and now there are dating Web sites. Research was in a library and now it's on Google. To be a player in search, you have 3 choices; you can buy a search company, build your own search division or finally partner with a search company.

1) Buy a search company: - Pros are gets you into search fast and new rev stream - Cons are there are not too many good ones left, choose the wrong one you are in trouble, you still will need highly trained and expensive people to integrate a search company within your agency.

2) Build a search division - Pros are you can own it, design it, profits are yours, a new revenue stream, and client loyalty - Cons is very expensive, you will need technology, infrastructure and processes, and you need new people with new expertise.

3) Partner with a search company - Pros, you're in the search biz overnight, immediate new source of rev, protects and solidified client relations - Cons, pick the wrong one and you're in trouble, less control and the partner can potentially cut you out.

His company had a similar decision to make. They partnered, and it bombed. They lost one of their clients, because of the 3rd party firm. He was hired to figure out why it failed. They choose the wrong agency because it wasn't the right fit for the client, and there was too much stress on technology. So they went and built their own division, which cost $500k and built the technology, and an internal commitment by senior management to make it a go. And it translated into a great success.

It's all about people, with technology as an aid. Technology not as the decision maker, but as an aid to people.

If you partner, base it on; trust, knowledge, search experience, accountability, reliability, recognize what is at stake, reporting access in real-time, details, technology, and agency experience.

If you can buy a search vendor, or build your own division that operates on a very high plane and produces the result you want, all the more power to you. It is a huge under taking and it creates a lot of stress, he showed a picture of him before he did it himself with hair and how he is bald.

Dave Carberry from is last up.

Questions: How many clients you have in house now? Would your search spend warrant hiring employees to fulfill that need? Can your firm handle maintaining an ROI focus rather than creative only? Would you prefer to hire an SEM firm and split the client fee? SEO is technical and time consuming - should you bill by the hour? How often would you change bids? Would you work 24 x 7? What happens if you lose your SEM?

He put up a slide of which companies are hiring SEMs.

Tools of the Search Trade: - SEM Specialist and/or SEM Specialist - Static bidding vs. portfolio bidding - Onsite analyst to determine client CVR and ROI - Qualified AdWords Consultant - Banner Ad Placement - Landing Page Creation - comScore Networks, Nielsen NetRatings - Ad Serving - AdRelevance

Thoughts for the Road - Billing the client, how are you going to do it? - Structuring the Fees (the engines don't bill in gross numbers) - Trademark issues - Indirect Competition (affiliate programs)

This can be very lucrative.


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