Posted June 18, 2009 1:50 pm by with 13 comments

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computer_frustrationI’m not kidding. While they might like you personally, most companies engaged in SEM are beyond disappointed with their returns, according to a new study from SEM firm [x+1].

First, the good news: Almost half of respondents—48.6%—said that the economy has had no impact on their SEM budget. And these aren’t little companies: 39% of these companies represented had a marketing/advertising budget of $5 to $10 million, and 7.5% had even more than that.

Also good: of those surveyed, 55.2% said that the champion of SEM in their company was at the director-level or above—with the CEO being the champion in 13.1% of companies.

But there looks to be quite a bit of bad news here. (I did say your clients hate you, didn’t I?). When asked how highly they’d rate their companies’ SEM performance, only 20% rated it a 6 or 7 out of 7:

Perhaps emblematic of this problem was the respondents’ ratings of their effectiveness. Of those targeting 30-100 keywords with individual landing pages, twice as many were dissatisfied or very dissatisfied with their performance:

In ranges above this, results were not much better, though fewer keywords yielded more satisfaction:

  • Only 14% were satisfied or very satisfied with this capability at the 500+ keyword level. Nearly half (48%) were very dissatisfied or dissatisfied with it.
  • A higher percentage (40%) were satisfied or very satisfied with their ability to optimize for 30 or fewer keywords and redirect to a pre-built landing page, an easier but less effective method.

The survey also looked at SEM conversion lift:

  • 15.9% said they had not noticed a big difference in conversion rates
  • 35% percent of respondents said they saw lift conversions of 5%-20% through the use of SEM
  • 10.3% said they consistently saw lift rates above 20%.

This may be a case of overpromising or poor tracking, however.

If you’re thinking you’re safe because you’re in-house (or not), sad to say you’re wrong. A little under 50% of respondents were using a dedicated in-house team, while almost 40% were using an outside consultant or agency. And we’d better look out: of those surveyed, 51.4% held the SEM decision-making power in their companies—and they could be acting soon.

[x+1] did have some recommendations to improve SEM performance, especially dynamic landing pages and rule-based ad targeting. What do you think? Are their findings accurate or skewed? And will their suggestions help satisfy your clients better, or do you have a better idea?

  • Oh wow. I wonder how much of this is related to any Tom, Dick or Harry rushing to fill the SEM demand without any real talent?

    Or how much is related to clients not understanding the benefit/cost/process/etc?

    There has got to be a disconnect here somewhere.

    There’s way too much “Hey there’s a word… let’s buy it!” This stuff is not easy folks!

    jlbraaten’s last blog post..3 Steps to Find Your Social Media Tools and Purpose

  • I think it could also be that the SEMs’ fault in just not reporting their successes to their clients widely/well enough.

  • I have seen both sides of the ledger on this one. Bad delivery on the agency side and/or no implementation on the client side. As a result, finger pointing is the most popular activity in SEM agency / client relations.

    I think more folks should be doing their Internet marketing in house anyway to at least some degree. Especially with social media and SEO becoming more and more intertwined. While agencies can provide levels of expertise for search they cannot replace / recreate / become the voice of a company.

    As always there are zealots on both sides of this fence that will always think the other is evil. We probably all need to just get over ourselves and concentrate on doing good business.

    My 2 cents 😉

    Frank Reed’s last blog post..Online Identity At Risk More Than Ever

  • Lots of need, not enough skilled SEO’s. Not nearly enough transparency into strategies and results. Great post! Thanks

  • Correct Frank both are to blame. The SEM may stink at what they do or the client might not be able to simply make a button bigger for a stronger call to action.

    Jaan Kanellis’s last blog post..PR Sculpting?Told Ya So

  • “I wonder how much of this is related to any Tom, Dick or Harry rushing to fill the SEM demand without any real talent?” I wonder that as well. I’m not an SEM by any means but it seems like the ‘experts’ are coming out of the woodwork in all disciplines… design, SEO, “internet marketing,” etc. Give someone 1,000 followers and suddenly they’re the last word!

    Josh C’s last blog post..What Is Web Strategy?

  • Part of the problem is an SEM firm not owning up to falling short of what it promised to deliver, the other is not going all the way in SEM efforts. Face it, if your customers’ SEM efforts fail, you’ve failed them.

    I realize a lot of online marketers try to sell lesser packages to bring on clients and hopefully sell them an upgraded package later, but more often than not the customer gets miffed at what they see as substandard results when in fact they got what they paid for by trying to keep costs down. That’s no foundation by which to upsell someone.

    In order to deliver results, SEM campaigns need to be all or nothing, not a part of the whole because it wasn’t in the budget.

    Patrick Shaughnessy’s last blog post..10 Helpful Internet Marketing Tutorial Videos

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  • Maybe the in-house teams in this study are as disappointed in results as those who are outsourcing but at least the companies doing it in-house aren’t paying agency fees on top of poor results. It is certainly true that in-house can be more costly (employee time) than outsourcing depending on the level of spend/extent of program. And I’m sure that there are case studies showing improved ROI from moving from in-house to outsourcing (haven’t seen any but I’m sure they are out there). On the other hand, I have plenty of case studies that show the opposite (better ROI by moving it in-house). At the end of the day, if a company isn’t willing to invest what is required to succeed — either in an in-house team or an outsourcing arrangement — they won’t, in fact, succeed.

    I am very surprised by the dissastisfaction voiced by in-house teams in this survey. The shift to in-house search has been well underway for some time and some of the comments on this post highlight the reasons for that (the ability to push the things that need to happen internally to make search work, making sure that search is part of the whole and isn’t a “set it and forget it” thing, substantial time and attention to the program — which is increasingly antithetical to the business model of agencies, etc.)

  • I think the problem always comes down to the basics of the relationship, clients expect to be on the front page of Google with a million hits an hour without understanding that SEM isn’t really capable of delivering that in most cases. On the flip side, a lot of SEO and SEM firms are crooked to say the least, raising client expectations to secure the contract without being able to deliver.

    Christopher Ross’s last blog post..By: LT

  • Can someone recomend to me a good SEM that he or she have tried and worked well, Please .

    edos’s last blog post..It Is Easy to Make Money Completing Surveys

  • Edos, where are you and what is your business? I’m sure all of us would be willing to give you a referral of some sort. 😉

    I’m not surprised by any of what you’re saying in this article, Jordan. In an industry where the ‘Godfather of Search’ has been in the game for less than 20 years there are going to be a lot of people and companies who make a lot of mistakes. New industries are rife with incompetence, lack of education or experience, and just plain a lot of people still figuring it out.

    I think this is just a reality check for all of us. We need to remember that we still have a long way to go as far as transparency, communication, and building value for our clients.

    There’s also something to be said for waiting for the industry to mature. We’re under a little bit more of a microscope in many ways because we’re so new to so many people. They’re paying closer attention and when they see something they don’t understand or that doesn’t look right, they’re going to be more likely to fly off the handle.

  • In my world, small business, I’d say those numbers are probably accurate. I’ve only seem one small company that was doing PPC well when I was invited in. I hear about PPC what I used to hear about direct mail from prospective clients, “Oh, we tried that and it didn’t work.”

    PPC is just like any form of marketing, it’s not that easy to get right. And PPC is NOT like many other forms of marketing in that it is direct response marketing. It can be tough if you’re used to creating beautiful brochures.

    Search marketing is a boon to small businesses because, if done well, it gets your message in front of people when they are looking for what you sell. It’s the “if done well” aspect that’s the tough part. 🙂