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The Healthy Consolidation in the SEM Landscape

Posted May 4th, 2012 by Andrew Goodman

For years, SEO companies and “rock stars” have whined that they don’t get the respect they deserve.

That’s been unsurprising, given that you trip over seven unethical SEO firms and two “cheesy borderline” SEO firms out of every group of ten. If only 10% of SEO firms are really “agencies” that adhere to some professional standards (including a degree of transparency, contemporary technology & practices, etc.), how can clients figure out what to do and who to hire?

It’s been a little better on the PPC side, but here too, it’s pretty easy to set up a “facsimile of the real agencies,” hoover leads in the door, and start billing for substandard work done by a mostly nonexistent organization. The tipoff is the About Us pages that launch right into an unverifiable jumble of information pulled from other agencies’ websites, never identifying the actual principals of the firm. And sorry, if you’re out on the highway in the desert somewhere in unit #4518 (a self-storage unit maybe?), if I’m a client you’re going to have to do more to convince me to sign up.

To briefly touch on the agency side of things and how it’s gotten better for clients… I do think it has, because somehow word of mouth is getting better and buyers are getting smarter. If they are hiring a large agency, they do that because of the safety factor. Probably you pay more for a bit less specialization and get less of some things, but most buyers don’t have time or enough luck to make it through the mysterious effort of somehow striking gold with a lone wolf practitioner who turns out to be up to the job in all facets.

In the middle are interactive agencies or SEM-focused agencies with known track records (like Page Zero Media, to toot our own horn here). Buyers know that there are actually just a handful of leaders running SEM-focused organizations with any depth, and that you can actually meet with them and talk with them at the major industry events (SES, SMX, etc., along with emerging dark horse events like Heroconf and the Acquisio User Summit – on the latter, get a load of who’s keynoting). Anyone who gets to know “PZ” team members like myself, Mona Elesseily, Dean Towers, Scott Perry, Dave Weber, etc., will know that many of us have been at this for 11 years now, and we’re training the next generation of obsessives as campaign complexity continues to challenge clients who would flounder if they tried to run them on their own. We’ve been around this long, and we’re going to be around next year and the year after that. For execution help, advice, audience building, and networking opportunities, we also partner with some of the most important entities in the industry; longstanding relationships with companies like Google, conferences like SES Toronto, companies like American Express OPEN, and vendors like Acquisio, matter to us and to our clients.

To look around the landscape (this post isn’t just about self-promotion but about B2B consumer protection, in the end), I’ve been more and more impressed by the trend represented by (for example) Blueglass, an interactive agency that was the product of several established groups coming together, plus the recruitment of some top talent that might have been considered “lone wolves” in their earlier work. It’s just easier for clients if they can get more of that in the same place, without worrying whether Rock Star X has a full plate for the next couple of months. In short, we’re seeing the  emergence of an agency landscape out of what used to be a bit of a mess. That leads to more professionalism, and more safety and long-term execution for quality clients.

There are quite a few others worth a mention, of course. And they don’t have to be huge. Look at Marty Weintraub’s group at AIMClear – they’re rockin’ it.

Let’s turn to the tool side.

There are a lot of disparate tools, platforms, and dashboards out there that many agencies and in-house practitioners alike use to automate, report, research, and generally excel. Despite all the wondrous innovation, though, the problem for the firm (let’s say it’s an agency) is chaos. It takes time and money to be constantly researching and testing out new tools from new vendors.

I mentioned this when writing three years ago about the bid management space. Although new companies have certainly emerged in marketing automation, it’s probably fair to say that a few names have really solidified their grip on different market segments. As two fairly close competitors in the past, it was probably healthy and good for customers that Acquisio acquired (haha, Acquisio made an acquisition) ClickEquations.

One thing I love about Acquisio is that I don’t have to jump out into another tool evaluation mode when my agency has new needs. In addition to core PPC reporting and automation features, they integrate third-party data (for example, through partnerships with The Trade Desk and GShift Labs), Facebook ads, and increasingly, more sophisticated needs like multi-channel attribution. There’s a huge learning curve with some of this, but the key is that the learning is within the same consistent environment and the service and support is coming from one team, not ten. Our team can expect to be using that environment next quarter, and the quarter after that. In that regard, it’s not so dissimilar from using tools from Google itself. You don’t have to be constantly relearning features and environments, and the fact that you’re not paying for ten vendors and administering multiple logins is a huge win as well.

That brings us to the recent home run for SEOmoz, long considered the gold standard in SEO tools. $18 million in high profile venture funding is a validation for their role in the industry and no doubt for their sound finances. But more than that, it provides incontrovertible proof that they are one of the few players with Momentum. For many buyers, including myself, the likelihood of shopping around and trying a whole bunch of competing tools goes down when I hear news like this. $18 million isn’t something SEOmoz needs to run its operation, but it’s a powerful signal that they intend to be around for awhile — indeed, that they will be something of a ‘hub’ that builds out more interesting functionality that transcends ‘mere SEO’ (hence their tinkering around with a name change to just ‘Moz’). And to take it to a personal level, once again… this is all happening because you and I know who Rand Fishkin is, know he’s always been a thought leader and a tireless builder of this product. Maybe you even know Gillian, or other members of his family. It matters to me that a vendor has the courage to stand up and be visible rather than toiling away in a self-storage unit by the highway in the desert with a generic ‘About’ page. I think it probably matters to you, too.

I first learned about Momentum (a book subtitled “How Companies Become Unstoppable Forces”) from Noel McMichael, who co-founded Marketleap, one of the first small SEM agencies that managed to exit with a decent (if far too low by current standards) acquisition price. Noel told me to read Momentum. He said it had been the most influential book in the building of his company. Rather than behave as lone wolves who are good at some things, Marketleap built a cohesive and fervent (if relatively small) agency to signal to clients that if they hired Marketleap, they were getting on board with a group that self-identified as a professional organization that would take a back seat to no one in terms of execution.

Momentum means everything to vendor choices. Companies from Microsoft to Salesforce have created empires based on some of the most visceral of B2B buyer instincts: no one wants to waste time adopting the solution that won’t be the “standard” next year, and the year after that. Buyers want consistent technology, not just the latest technology. They want support and service, and organizations that can support learning and networking opportunities.

Many clients are still outsmarting themselves by hiring flaky, unqualified firms in order to save a dollar or two, but it’s getting better. Smart buyers know that the landscape is not as chaotic as it looks. There are a relatively small number of reputable agencies and software platforms to pick from. Those are the ones you’re going to be hearing from again and again.

4 Responses to “The Healthy Consolidation in the SEM Landscape”

  1. Adam Davis says:

    I really liked your article. Very keen eye. I am one of those lone SEM wolves and I believe our kind are becoming extinct. It is close to impossible to do everything well by yourself, it is pretty lonely after 10 years, and clients are getting smart and nastier. You need of people just to keep clients happy. I will read the book and reconsider my position and value proposition better, thanks again.

  2. Ewan Heming says:

    Hi Andrew,

    Do you thing that Google’s attitude towards third party vendors might be similar to yours: That they just want to work with a few established companies, instead of everyone that wants to be the next Marin/Acquisio/SEOMoz, but won’t even follow the basic TOS?

    I’m having a very confusing time at the moment as another “lone wolf”, working in PPC tool development: It looks like Google’s just messed up their API application process, and is taking months to go through the backlog; however, with the likely introduction of app scripting for AdWords, I’m wondering if Google might be stalling things until the scripting comes out of beta? They could then tell small agencies that they can now build their custom bid and feed management scripts within the AdWords interface, and tell tool vendors that they need to demonstrate value before gaining access to the full AdWords API (similar to the way Facebook is currently issuing tokens).

    I’m not sure how much experience you have with this, but as someone closer to the industry than me it would be interesting to hear your views.



  3. Andrew G says:

    Hi Ewan,

    I don’t really have any specific comments other than — I’m sure it must be frustrating, but the flip side (per my “pat down” column) is partnering with inappropriate third parties. I suppose when Steve Yegge said “Google doesn’t get platform,” he must have also meant that Google has not built up a sufficiently large infrastructure (yet) to work with all of their various ecosystems with so many third parties leveraging their API’s.

    It has been a long and confusing road for Google in this regard. As one of the first ever AdSense publishers to apply (did so for this blog mostly just to kick the tires), I was struck by how easy (too easy) it was to partner with Google. At other times in various areas it has been more difficult.

    Facebook in the end is no different from Google. While their core user interface is intrinsically about third parties, when it comes to the advertising system API (for example), you correctly note how much weight FB puts on a very short list of partners.

    Google has taken on tremendous challenges having such a large number of advertisers, to say nothing of tens of millions of Google Analytics accounts. They always want to lowball the infrastructure and headcount on these initiatives (at first). I guess it is a rock & hard place scenario: the more bureaucratic these processes may be, the more accurate and service-oriented they may become. With insufficient resources, they can either let chaos reign, or make you wait longer.

  4. Ewan Heming says:

    Yes, I think that most people can accept the waiting longer bit (even if it’s a very long time), but I think Google’s current lack of communication is making many people nervous about their intentions, and worried about spending money developing tools that they might not be able to use even if they fully comply with Google’s TOS.

    I guess Google originally took a very different approach than MS & FB to letting people use their Advertising API: Everyone could use the AdWords API as long as they paid the API charges, whereas Facebook have been carefully selective, and I don’t think Microsoft would have ever opened it up if it wasn’t for the search alliance. Unfortunately, it’s become messy now they’ve realised that such open access has made it very hard to keep tabs on what people are doing, and whether what they are doing is actually beneficial for Google.

    I think that, as with many Google initiatives, the main issue really relates back to search quality: This all started when a batch of API keys held by Keyword Tool developers were revoked without warning; many reapplied at the same time, but I don’t think that Google wants them using the API anymore. The problem is that many of these tools were designed to find “niche” keywords that would be easy to rank in the SERP’s, yet had commercial value in the AdSense program; adding fuel to the blight of “made-for-adsense” sites.

    It’s ironic that you mention how easily you were accepted for the AdSense program as I recently applied for it so I could test out the API, and was amazed at how fast I was accepted; I had ads running within 24 hours! Surely the problem really lies with the limited vetting of publishers for a system that pays out based on clicks instead of conversions, where lots of page views of low quality content seems to be a good strategy for making a quick buck. Google seems to look down on affiliates that use CPA networks, yet the vetting for most of those is far superior than their own program.


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