Paid Search Automation: Choosing A Vendor

In the previous two columns, I covered questionable assumptions and inconvenient truths related to bid management automation in paid search. With all those reservations and concerns out of the way, if you’re in the market for a solution vendor, you still have to form a relationship with one that meets your needs. Let’s look at some criteria that might help you choose.

Requisite full disclosure

There are many viable bid automation options. At this stage, it’s important to reveal the author’s biases and business relationships, if any. I’ve done my best to try out such tools over the years. The fact that the field changes quickly confers an advantage to vendors with the resources to update their software to reflect changing paid search platforms and changing tactical requirements. It also confers an advantage to “late movers” who have studied buyers’ needs and are in the process of building out their tools today. I’m on the Advisory Boards of two such vendors: (1) Clickable, a New-York-based paid search campaign management vendor that has closed significant rounds of venture capital funding led by the likes of Union Square Ventures; (2) Acquisio, a Montreal-based firm that gained its chops as a search marketing agency but today focuses on software. Acquisio has some private investors and is nearing the close of a Series A round of venture capital funding.

I’ve heard many good things about Click Equations, which boasts Avinash Kaushik as an advocate and adviser; and Adapt, recently acquired by WebVisible. Kenshoo is another hard-charging new entrant into the space, with recent funding from the likes of Sequoia Capital. I have no formal ties to these or any other vendors in the bid management space.

Where are the happy customers?

Speaking of bias, it’s hard to get neutral answers about this technology from users in the field. Informal surveys of real users don’t tend to get you positive mentions at all. Many users I’ve run across offer only lukewarm support for their bid management vendor, and many times when you ask, users will signal that they intend to switch vendors or simply stop using third-party tools. There are many reasons for this, but I would cite a lack of trust and customer support, as well as unimpressive ROI, as common reasons for discontinuing use of legacy bid management tools. Cumbersome usability would be another.

Despite repeated efforts to probe for neutral contributions to the “pro-automation” side of this debate, the preponderance of those who speak up on this subject take a like-minded position to the one I’ve held for years: automation can hurt more than it helps, and talented, passionate marketers and analysts are in such short supply that this human element is the main variable that will make or break your campaign. Lance Loveday echoed the sentiments of many with a satirical take on “push-button marketing” in his recent SEL column. An observer of the UK search marketing scene recently posted to the SEM 2.0 group : “Human skill involved in search is undersold, is undervalued. The importance of the people that run
the campaigns in the search equation is more important than ever and all I seem to hear from agencies, aside from those above and some US agencies ~ last 24 months are that they save us money or they bring technical proprietary to the table.”

As I mentioned in a previous column, if you couple that sentiment with the fact that those talented and passionate marketers will have plenty of support and automation offered to them from the first parties (search engines) themselves, third-party sellers of automated tools must make their case in an increasingly crowded and skeptical marketplace.

But assuming you understand all that, automation can save time and money. So I hope this list of general criteria offer food for thought in your upcoming vendor selection efforts.

Criteria for choosing a bid management automation vendor

I’ll divide these into two categories: general or corporate characteristics, and features. The general points about your business relationship with the vendor are actually more important, given that feature sets change rapidly.

General criteria

Before zooming in to look at individual vendors, it pays to consider these broader issues first:

Appropriateness. Your business needs to be buying enough paid search clicks, and facing certain key challenges with the lack of available automation, to make it even worthwhile to use some of the sophisticated third-party tools out there. Very sophisticated tools that make frequent bid changes, and do other Stupid Non-Human Tricks, may only be suitable for 1-5% of the market: typically, high volume, low-margin retailers in fast-moving markets. Even with more appropriate and less expensive tools, sometimes the cost and learning curve may outweigh the benefit if your spend is small. The classic target market for many of these tools is an agency that manages multiple accounts. But some vendors in the space are targeting a large number of small to midsized businesses. I’m not sure that’s going to work out.

Trust, independence, and privacy policies. In this space, I tend to favor pure software plays over those that are tethered to the service operations of an agency. From the agency’s standpoint, automated tools can be a powerful selling point, and a powerful barrier to switching. From your standpoint, though: if you’re an agency, it’s inevitable that using or recommending one of these tools is going to offer a competing agency the chance to poach your clients, or at the very least study their behavior. If you’re the client, you may find that there is a fear factor in discontinuing your contract with the agency that promotes its own automation tools, so you’re overly dependent on the agency.

The flip side to that concern: a well-integrated service and solution offering can be the best of both worlds, providing a smooth and convenient process. Independence is an issue in general. Few of these vendors are built to last. Acquisitions are not always disruptive, but if the acquirer is a big search engine company, then this may defeat the purpose of using a third-party, independent tool. There’s no question that in using paid search automation you’re handing your back end business data over to yet another vendor. In this regard, the general as well as personal characteristics of vendors are important. If the vendor has a track record of respecting privacy policies, and not seeming “snoopy,” that’s good.

Cost, total cost of ownership, and Kool-Aid threshold. Don’t put off the question of how much the tool and associated services cost. Ask early, and often, and ask if you will pay extra if you go over an allotted amount of account activity. Then ask yourself if the learning curve to become proficient with the tool is going to pay for itself in the next 6-12 months. Less strictly speaking, if it seems like the relationship with the vendor will be too high on your agenda and get in the way of other work, you might decide it just isn’t worth the hassle. Remember, you’re trying to simplify and optimize your own business, not join someone else’s cult.

Momentum and standards. No technology is forever, but most of us out here are looking to ride periods of continuity in standards for all they’re worth until such time as we need to jump on something else. Being constantly in evaluation mode is disruptive. We want to be productive. So if something bills itself as a “platform,” it had better turn out to be just that, not some kind of techno-wobble-board that sends you flying after a few short months. In the web analytics space, for example, a tiny minority of vendors have been big or long-lived enough to evolve almost into “the” standard: WebTrends and Google Analytics qualify here. In ad serving, enough agencies and practitioners worked with their specific technologies, that DoubleClick and their DART became accepted as a standard. Enough people used third-party paid search bid management system Atlas that their URL tagging system became close to a standard for awhile.

My confidence level in a paid search bid platform as a long term play with momentum depends in part on who comes out on top of a messy struggle for supremacy. And that in turn likely rests on continued growth in the overall dollars being invested in the channel, and these tools’ adaptability to the long-term challenge of buying and managing other auction-based media. I think all of this will come true: the number of dollars being spent by the typical company through the AdWords-style auction environment may still have a long way to run (say, a five or tenfold increase from where we are today); and one or two third-party platforms will emerge from the heap as standards many of us rely on to facilitate the tasks at hand.

Features and benefits

Here are some high level criteria to look for. This doesn’t drill down to every detail.

Workflow. No one got into the SEM industry so they could feel like they were doing a rote job, akin to working in the bowels of a bank processing center. This sentiment of course is neatly encapsulated in Acquisio’s famed t-shirts that read “I HATE DOING THIS SHIT.” The “stuff” (like managing individual bids, doing global changes to ads, etc.) that account directors hate doing is more fun when automation speeds that process rather than making you an extension of the machine. Clickable, for their part, has contributed fresh thinking to our industry by focusing on an intuitive user interface rather than forcing users to shape their workflow to the demands of a spreadsheet-era tool.

Today’s best newer-generation tools combine the concept of “alert based” or “decision support” automation with priority-setting. So to take the Clickable example, the human analyst, not the system, is still running the campaign. The analyst’s decision making is supported by a prioritized alert system that means the human doesn’t have to pore through long lists of data and recommendations. I’d be remiss here if I didn’t add that the third party tools need to be better than free Google AdWords Editor at all this. They should provide helpful aids such as competitive intelligence and ad copy support, built right into the interface. This type of functionality is going to continue to evolve, but only a handful of vendors have the diverse product development chops to make it all come together.

Sophistication where appropriate. If possible, look for aspects of sophisticated computation methods that would be a natural extension of your own campaign strategy. Some of this might include improved grouping, and predictive models that help you bid accurately on low-volume keywords based on a portfolio approach (only a few vendors are likely to have the sophistication to actually pull this off). Another set of cool features should be interesting bid rules that might come in handy to an experienced campaign manager, above and beyond the simple “target CPA” bid rule and other simple features that are already built into the search engines’ own interfaces.

Acquisio is currently rolling out several innovative bid rules. Some vendors in the space now offer enhancements like better attribution and other analytics features you just can’t get with free products like Google Analytics. That’s gotta be a plus. One or two vendors offer proper support for designing multivariate tests for ads. Given that my agency was one of a handful that pioneered structured multivariate testing of rotating paid search ads (as opposed to landing pages, the more common form of multivariate testing in the digital marketing space to this day), all we can say is: what took you so long?

These ideas just scratch the surface. Overall, you shouldn’t be blown away by general technology claims (of the “same materials used in space shuttles!” variety). But smart is good, especially if it helps to plug holes left by free offerings.

To wrap up, my personal curiosity about technology platforms in the field of accountable digital advertising leads me to wonder about a couple of other criteria or factors driving change in this sector. The first is about platform scalability: are too many vendors essentially hacking out semi-robust demos based on their development team’s initial technology recommendations, using languages and protocols that won’t scale? (But people have said the same about everything from AOL to Twitter. Usually if you get big enough, you can adapt.)

The other question in my mind is about consolidation. I mentioned standards earlier. While not quite winner-take-all, the sector cries out for leadership, and said leadership will mean that also-rans fall out of the race. Clearly two things have to happen in this space for the benefit of end users. First, some of the current vendors need to merge or some need to die off by attrition. Second, vendors will need to sort themselves out so that they target different subsets of the market. That scenario is already well underway, and it points towards the Occam’s Razor of more consolidation but maintaining some diversity of solutions for different needs.

We’re not quite done yet! Next time, I’ll review a bid management horror story. It’s a real page-turner.