Session: Business Issues For The Big SEM Shop

Dec 4, 2006 - 1:09 pm 3 by
Filed Under SES Chicago 2006

SEM Firm Track

Session: Business Issues For The Big SEM Shop

Desc: Should you do rev share? Bill on percentage of ad spend? How do you deal with existing ad agencies? Should you expand to cover more than search, if there's client demand? How do you keep good employees from leaving? This session explore these and other issues facing the medium-to-large SEM firm.

Moderator: Jessie Stricchiola, Founder, Alchemist Media Inc.

Speakers: Alan Rimm-Kaufman, President, Rimm-Kaufman Group Llc David Williams, Chief Strategist and Co-Founder, 360i Peter Hershberg, Managing Partner, Reprise Media

ARK = Alan Rimm-Kaufman DW = David Williams PH = Peter Hershberg

Jessie begins. Building from the small biz.


Fee structure for ppc. Why structure the fee to use? It matters. Incentives drive behavior. Model rev share, ad expense, flat model, hourly model. Rev share pro is pay for performance. Brand name generates sales. Measure clicks. Sales. A search for brand name is like a white page, not a yellow page. Talks about real cost and effort put in. Low hanging fruit is easy to get. Disputes rise over who gets what of revenue. Recommends program audits. Twice a year do order audit. Evaluate other channels like direct mail in-house mail portal ads ebay auction affiliate infomerical. Ad markup con is work incentive, overspend. 15 day out clause in contract. Up to 30 days. Put a cap on top and bottom of ad spend, When holiday sales go through the roof, you need to determine a cap. Need a monthly minium. Caps protect client at the top. Protect agency at bottom. Disuadde clients wheich are too small. Muliple site discounts. Ala carte add on services: feeds, consulting, custom programming. Be fair on caps. Offer easy outs. (This presentation had graphs that did a better job of supporting his talk.)


Staffing Discussion. Major issue for everyone. How many are involved in hiring process? Two pieces - planning and retention. SEM has sig turnover, rapid pay increases, lack of skilled and senior employees, fast moving and stress env., changing tech, need sophisticated skills, no recognized industry training, SEMPO in launching an institute. Will be announced tonight. Do you plan and budget hiring in advance? Are you hiring just to replace or growth? Do you have a strong hiring process? Strict hiring process? Staff and mgt trained in interviewing? How is your company different from others? This is a important. Hiring is competitive.

What to consider when hiring. Size and sophistication of clients. Industry focus. Agency or inhouse. Reputation of your company? Leave room for pay increases. What do Yahoo! and Google think about your agency? Are you a leader? Your hires will be interested in what you offer them. Expecation of performance based benefits, important for senior level. Upward mobility? Are you structure for growth? Make opportunities for employees. Don't train the competition. Look for other skills like project mgt.

Big clients needed account director, media services, director of data analytics, director of natural seo. Having these people helped his company get big accounts. Staff must have 8-10 years experience. These people help grow good client relationships. Compensate your staff and stress they have a stake in success of company.

Grow from within. Monster. Craiglist. Local uni. Local job search firms. SES shows. Staff referrals. Conferences. Internal candidates, move them up. These are where to find new hires. Edu inc. ecom, stats, marketing, business, good schools, previous experience, computer science. Turnover is high and has a neg. effect on key client relationships. 1st step should be to take care of existing employees. Thirsty Thursdays drink, skills, training, strong mgt., strong processes, company events, knowledgable about company, excellent work benefits, working env like office space, location, etc. All of these contribute to lowering turnover. This is good for junior and senior staff.

Hiring the right people. What are your goals? Bad hiring decisions take a long time to correct and have a negative effect on morale. Hire for future, not just todayt, esp.for rapidly evolving industry. Don't be afraid to let go of bad performers. Referrals from employees and industry hires.

Company Benefits inc.stock incentives, profit share. Reduce turnover, have strong benefits, budget and plan in advance, have a good process, hire for future, look for strong sklls and well rounded people. look for mentors and those who want to mentor. Compensation is important. Referrals are key.


Biz issues for Big SEMs Differentiation/Marketing. Big firms are faced with high growth in the industry. People want to get into this business. SEM firms are well represented. Analycis companies, consultants, interactive agencies, rich media...these are companies who are entering this industry. Are they any good at SEM? It's getting harder to tell. Work doesn't stand on its own. Can't always tell how good based on ads out there. Full service, intregrated servicces, leading, solution, are terms that mean the same thing. This is a challenge that needs to be dealt with. Many terms doing the same thing. How can you differentiate?

What to do? Vertical focus. Market segment, such as going after local search market. Partnersip and Acquistions. Geography which are focused on your own area. Less competition. Finding a focus and niche. How to stay ahead of the curve? USe emerging formats. Video, audio print and mobile, radio, tv. These are formats to focus on. Quality based bidding. Strategy becoming more important than managing the auction. Google has driven this. Follow their terms of use. Google has a "All or nothing" support. Technology: build or buy? What to consider? Build right tech if you know the problem you are tryng to solve. Build technology if you the time and resources correctly. Sometimes there's a moving target, hard to build for. A lot of technology out there. Can you improve on an existing solution?

Where is market heading? There is more consolidation in the industry. Build and scale what they already offer or they're builidng new. Fragmentation is another. Companies focus on landing pages, creative opt. keywords, focus on segments of the industry.

Q & A:

Setup fees? So much work is front end loaded. Start billing before ads go live. Some can charge a fee or not. Verticals - How to serve multiples when you are changing hats? Will you serving competitors and is this trouble? Competing for keywords an issue? You may need to decide whats fair to existing client. Does it make business sense to manage two competing campaigns? Conversions are the comparison factor. Some clients don't want you working for a competitor and thats in a contract. Be cautious about giving contracts with competitors

Pros to hourly, use for mechanics, marketing advice, writing pages. Retainer, hourly or percentage offer different options depending on client need and budget. Some clents don't have a long term need. There are opps for custom services based on their need.

What to do with small clients who can't afford you? Do you send to partner, other company? Okay to make recommendations. Many that went away eventually return. Be honest with them. Find agencies who handle smaller clients. They may send you the larger biz they can't handle. There is a lot of "search business", there's room for everybody. Decide if you want to help them a little, send away or do some and take a certain percentage for your time.


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