Nearly three-fourths of companies that outsource their pay-per-click search marketing to agencies are dissatisfied with their results, and only 21 percent are completely satisfied, according to a Jupiter Research published late last year.

What causes this dissatisfaction, especially for B2B marketers? There are five factors at work:

  • Most agencies specialize in consumer search marketing and their services are inappropriate for your unique needs as a B2B company.
  • The agency business model skews in favor of the largest spenders and under-serves the majority of B2B advertisers.
  • Agencies will never understand your customers and your business as well as you, especially B2B firms that sell more complicated products and services.
  • The need to coordinate with outsiders implies latency and information loss, meaning you lose the flexibility and agility to react quickly.
  • Outsourcing means losing control over a critical portion of your demand generation strategy to outsiders who may have different incentives than you.

The main value provided by agencies is expertise with SEM, and as I’ll explain, you can bring much of that expertise in-house by using the right kind of pay per click management software. A technology solution can create the best of both worlds: the control and business knowledge of doing it yourself, combined with the SEM best practices and techniques of an expert.

Before diving into this “inconvenient truth”, it helps to understand the common arguments used by agencies to convince B2B marketers to outsource their PPC campaigns.

Why Companies Outsource PPC Campaigns

The first argument falls into the broad category of FUD (fear, uncertainty, and doubt). It takes on various forms, but comes down to this basic point:

“Search is really, really hard – you should leave it to the experts.”

Tactics like this are meant to instill fear that if you don’t outsource, you will fail miserably with search. The head of one agency likes to say that “There are only two kinds of marketers at the top of the auction based search results: Brilliant Marketers and Total Lunatics.” Since most people don’t think of themselves as brilliant search experts, the implication is that if you don’t hire his services then you must be a total lunatic.

A more subtle form of this argument says that the world of PPC is changing so fast that you could never keep up yourself. No matter what form it takes, this argument is self-serving to the agencies. Although it might have been true a few years ago, today the in-house B2B search marketer has access to easy-to-use PPC management software. These tools help to level the playing field by automating the techniques and best practices used by the agencies.

While the first reason B2B companies outsource their PPC marketing has to do with knowledge and expertise, the second reason has to do with time. The core of this argument is:

“I’m too busy to manage search. It’s easier to pay an agency to take care of it for me.”

I have no doubt that most B2B marketers feel beleaguered for time, and that dealing with PPC can feel like yet another burden. The allure of being able to pay an agency to have one less thing your plate is appealing. This can be a valid reason to hire an agency, although the appeal fades once you realize you should be highly involved on an ongoing basis to get the best results from an agency. The agency doesn’t understand your business like you do, so they can’t react to competitive changes or deal with new business initiatives as well as you can. The only things they can do without you are tweak bids, use tools to suggest new keywords, and generate reports – all tasks that automated software can do better and cheaper than a consultant can.

Why Companies Shouldn’t Outsource PPC Campaigns

1. Most agencies don’t specialize in B2B search marketing. B2B search is different from B2C search, meaning it requires different techniques and optimization methods. B2B keywords tend to be lower-volume than B2C keywords, but the value of a B2B lead is much higher. Also, B2B transactions have a more complex sales cycle, involving multiple decision makers – each using search in different ways, with different motivations, and at different times during the sales cycle. An agency that works mostly with consumer companies may not have the proper expertise to deal with the specialized needs of B2B.

2. Agency business models are focused on the largest spenders. Agencies are, by their nature, service businesses that are only profitable if companies spend $10,000 per month or more on search. (These minimums keep going up every year.) That leaves the majority of B2B companies out in the cold. Be wary of agencies that promise to provide reasonable service at levels below $10,000, since at those levels an agency can profitably give you only a few hours a month. It is much more profitable to focus on the largest accounts, leaving the smaller accounts to run mostly as-is. (Of course they still earn their fees every month, regardless of how much time they spend on your campaigns.)

3. You know your business better than the agency. One of the most important skills for PPC success is picking the right keywords that your prospects actually use when they search – something you know best. Also, when determining rankings, Google and now Yahoo! care as much about the relevance of your content as they do about your bid (aka “what you say is as important as what you pay“). This means a good understanding of your business and your industry is at least as important as being a search “expert”. Over time, the balance of power between business knowledge and SEM knowledge will shift even further towards business as Google continues to find ways to reward relevant content and discount search agency tricks.

4. In-house improves flexibility and the agility to react quickly. I recently met with one B2B marketer who was paying his agency a whopping 40% of his overall PPC budget, yet they were still bidding on words that were not converting to leads. All the back-and-forth emails and phone calls required to coordinate changes created latency and information loss. This meant it took weeks to get a new campaign launched. In contrast, his competitor who kept search in-house could launch new campaigns in under one day. It’s no wonder the competitor had better PPC results.

5. Agency incentives are not aligned with your goals. When you outsource PPC, you give up control over how your money gets spent. Whatever your agency promises, their first incentive is to grow their own business – meaning they will usually tell you that search is performing great. This is the fox guarding the henhouse! It is up to you to put their information in the context of your overall demand generation strategy and to make the critical decisions about whether your marginal dollar is best spent on search or another demand generation activity.

When to Bring Search In-House With Technology

There are a few basic skills required to succeed with SEM: pick the right keywords, optimize bids to achieve desired business outcomes, create great landing pages that drive conversions, and use testing and measurement to continuously improve your process. Each of these requires business expertise and SEM expertise. Only you can provide the business expertise. SEM expertise can be found in an agency, and for some companies that will always be the right choice. For example, I have no problem with outsourcing your SEO campaign. Also, if you don’t use search today and outsourcing gets you started, or if don’t have enough time to spend on search, then using an agency is certainly better than doing nothing. (This is especially true if your agency takes advantage of technology to automate the tasks that software does best!)

However, I believe that your best results will come from having your PPC campaigns managed by the true experts – you. The same techniques and best practices used by agencies can and should be automated with technology. Choosing B2B search marketing software allows you to optimize your PPC campaigns like an expert, without the loss of control, latency, and overhead associated with an outside agency. And that’s an inconvenient truth for the agencies.

Jon Miller is VP of Marketing for Marketo, a provider of affordable, easy-to use-marketing automation software that helps B2B marketing professionals drive revenue and improve accountability. Jon’s blog, Modern B2B Marketing, explores best practices in business marketing, ranging from pay-per-click management to lead nurturing to marketing accountability. The Strictly Business column appears Wednesdays at Search Engine Land.

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: B2B Search Marketing Column | Channel: Search Marketing | SEM Industry: Outsourcing

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About The Author: is VP of Marketing for Marketo, a provider of affordable, easy-to use-marketing automation software that helps B2B marketing professionals drive revenue and improve accountability. Jon's blog, Modern B2B Marketing, explores best practices in business marketing, ranging from pay-per-click management to lead nurturing to marketing accountability. The Strictly Business column appears Wednesdays at Search Engine Land.

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  • AndrewGoodman

    Of course B2B projects don’t lend themselves to cookie-cutter solutions. Because my shop deals in custom work and uses primarily senior analysts, I have to stand up for some of us here! Our B2B projects are successful primarily because we haven’t thought only about how to scale our business, but how to customize for client satisfaction. On the other hand it is definitely easy to overstate the “only you can know your business” aspect. Working with enterprise B2B plays, several times we found that the sales forces of such companies can sometimes be short term mercenaries out for a buck only. It’s the dedicated marketing agency that actually comes in and rewrites the marketing copy and coaches the company into revamping their lead generation assumptions and navigation. Inside of three weeks we knew more about the business than some of the salesforces have cared to, primarily because we followed the Cardinal Rule of PPC, which is: avoid insider thinking. Even sophisticated customers search differently than you might think. A good search agency knows this, and builds and tests accordingly. Frankly, if you’re hiring a Big Retail PPC to handle this type of work with their automated platform charged with doing most of the “thinking,” then you deserve the outcome!

  • http://blog.marketo.com/ Jon Miller

    Andrew – I agree you shouldn’t let the quota-focused sales force pick your keywords. That said, the demand generation teams at B2B companies need to deal with many lead generation channels besides search. They had better be able to understand their prospects and know what copy speaks to those prospects — otherwise NONE of their demand generation programs can be successful! I believe this is a critical skill for success in B2B marketing in general, and as such it shouldn’t be outsourced.

    Now, all that said, there is always room to get different perspectives, and sometimes an outsider’s perspective can be hugely valuable. I have no problem with working with outside consultants to provide additional inputs, but that should augment, not replace, your in-house campaign.

  • http://www.evilgreenmonkey.com evilgreenmonkey

    I do love a good unbiased article ;o)

  • Jamie

    I really like this bit of analysis regarding agencies “The only things they can do without you are tweak bids, use tools to suggest new keywords, and generate reports – all tasks that automated software can do better and cheaper than a consultant can.”

    If that is all your agency can do without you then they suck.

    The one point you made that really resonated was about having the agency incentives not aligned with your goals. There is an easy way to fix this though, pay the agency a bounty for each conversion at or below a set CPA.

    The rest of it sure seemed like a pitch for a software solution that can automate the lead generation and nurturing processes, optimize the effectiveness of marketing spend, and help marketing deliver more ready-to-buy leads to sales.

  • http://www.adapt.com Erica Forrette

    Agree that oftentimes it is best for marketers to handle it themselves for the reasons above, plus for cost-effectiveness. In other words, not everyone can build in the agency fee on top of their search budget. I might even argue that marketers who pay an agency fee to manage SEM get lower volume/results because theoretically the money paid to the agency could be spent on driving more clicks (& hopefully conversions) to your Web site. OTOH, if the agency is generating conversions efficiently then this point is moot and the marketer is getting their money’s worth. Still…. if you’re getting a great conversion rate on your Web site, think of all the extra clicks that fee-money could buy ;-)

  • http://searchenginemonkeying.com Dangdatkat

    I’d like to hear about different methods of building custom b2b campaigns that appeal to the differences in the hierarchy of decision makers.

  • http://blog.webmama.com webmama

    Funny, I always thought the PPC companies who run large consumer accounts had it easy. Obvious keywords, obvious competition, automated systems.

    We only run paid search campaigns for B2B companies – large B2B companies. We manually manage bids that go as high as $25/click in order to provide leads to a direct sales force that close deals with an average selling price of thousands of dollars. We learn with each client how to write creatives and landing pages to interest the researchers and capture the information of the buyers. We apply what we learn from each client to others since B2B, as noted, is a different beast than B2C. [We don't work with competing companies.] We apply learnings from PPC to SEO tactics and vs.

    Our knowledge in B2B search and internet marketing is 7-9 years deep. There are few in-house marketers who understand how to generate leads through search the way that my team – and other B2B search marketing specialists – do. They need us, if only for our experience through the growth years of search.

  • http://www.emergence-media.com DanielR

    From the Article:
    “The same techniques and best practices used by agencies can and should be automated with technology. Choosing B2B search marketing software allows you to optimize your PPC campaigns like an expert, without the loss of control, latency, and overhead associated with an outside agency. And that’s an inconvenient truth for the agencies.”

    From the writer’s quick bio:
    “Jon Miller is VP of Marketing for Marketo, a provider of affordable, easy-to use-marketing automation software that helps B2B marketing professionals drive revenue and improve accountability”

    The fact that those two passages are close by each other, doesn’t feel right.

    Jon, its a great article, but towards the end it becomes a sales pitch. I’m sure it probably wasnt you’re intention but I’m sure that does sour some of the readers, right or wrong.

  • http://searchengineland.com Danny Sullivan

    I wanted to chime in with some comments of my own, especially about some of the concerns that Jon might be biased in his column.

    First, my sincere apologies that we didn’t have Jon make it clear from the start that he has a particular interest in this viewpoint. It would have been much better from the outset if he explained that as a tool maker, he has an obvious viewpoint here. We should have done that, failed to do so and will be better at it next time.

    Second, columns by their nature often have strong viewpoints based on where the writer is coming from. I don’t mind if a column sparks some debate and even if it comes strongly off a particular writer’s interests or business standpoint. Jon’s certainly done that here.

    As for myself, sure — I think many companies might benefit by doing PPC internally, just like they might benefit by doing SEO internally. But agencies, PPC agencies, can bring real value to anyone. To go back to Jon’s point — yes, search is really, really hard. And some companies would benefit by enlisting experts. It can be easier to outsource to an external company. And building in house is great, but you also get plenty of people who build an in house person, only to see that person depart.

    I’m never in favor of any “right” solution for everyone. B2B marketer or not, sometimes doing PPC in house makes sense, and sometimes doing it externally with another company make sense. And there are plenty of external company that can and do conveniently do a great job for their clients.

  • http://searchquant.blogspot.com Searchquant

    [I'm with Efficient Frontier a U.S. SEM managing $300M+ in annual spend. My opinions are my own and *may* be biased]

    The reasons most advertisers are dissatisfied with their SEM is that in the majority of cases the SEMs have sold themselves as having technology, people, processes, experience and results that they…just…don’t…have.

    We see this all day long, whether it’s

    1) an SEM saying they have a great platform that tests all possible keyword variables and targeting options. Never mind the fact that testing *all* variables is a perfect way to not have enough data to opimize anything…

    2) an extremely well-known SEM guaranteeing a 15% performance improvement to each and every company they talk to, irrespective of inflation, market dynamics, budgets, etc. To an uneducated buyer, hearing this sort of guarantee from someone whose columns he/she reads on SEM industry sites makes it believable, but the reality is it’s a sales tactic used out of desperation.

    3) an SEM securing a $0 test with one advertiser in an industry and then going to 5-10 other firms to tout their ‘proven industry experience’. Gimme a break.

    The reason most SEM’s suck is not that outsourcing is the wrong model. They suck because all anyone needed to build an SEM business several years ago was… a pulse. Pulse-bearing SEM’s thus sprung up, got lots of customers based on lies, cheating and/or buying business with $$$ from VCs and angels who took the definition of ‘dumb money’ to new, dizzying heights.

    Now, however, SEM requires more than just buying keywords. You can’t just have smart people because smart people alone can’t scale to handle all the business they can get. Nor can you just have technology, because whether you’re talking B2C or B2B there are and forever will be aspects of SEM that can’t be automated and require the regular intervention of smart SEM tacticians, data analysts and the like.

    As for technology, 95% of the SEM’s out there have done nothing more than web-ify the Excel spreadsheets they used to manage bids back when GoTo was the market, bid landscapes were transparent, and keyword management was a cat and mouse game between two geeks who were both running non-branded protractor comparison shopping sites.

    Today you have opaque markets, markets where everyone has found the good keywords, and everyone has web analytics in place and some understanding of LPO. Advertisers are hitting volume and margin ceilings they can’t get past in search and they’re finally looking at what their SEM has been doing and realizing with horror that their supposedly sophisticated partner had a great pulse, but not much else.

    There are a few good SEM’s, though, firms that have taken little VC money, who built either scalable processes, novel keyword optimization technology, outstanding teams or some combination of the above. Find those firms and you’ll do better than you could *ever* hope to do on your own.

    EBay’s VP Internet Marketing – Matt Ackley – gave a keynote presentation on the search day portion of eTail 2007 in Palm Springs a month ago, in which he described how they’ve invested $15M+ in technology and have 100 people working on SEM systems and operations there. EBay can do that because they’re eBay, but for most companies that’s not an option, nor is hoping a web-ified Excel spreadsheet will save their day.

  • http://www.traffick.com AndrewGoodman

    I’m really not sure that mingling hearsay about a competitor with facts about your own company is fair thread fodder. (And having said this let me make it clear in case someone interprets it this way, I’m not “15% guy,” whoever that is. But I would caution that clients will often corner you into giving an estimate of improvement, so that’s probably when someone would pull out the 15%.) Searchquant, you seem to be so negative on the industry that you narrow it down to a tiny percentage of firms who do good work. I wouldn’t be so negative in the sense that our industry as a whole is still busting down barriers to rational thinking in the ad industry as a whole. And visiting the international conferences (as you’ve done), I’m reminded that an average to above average North American SEM campaign is far more optimized than most elsewhere around the world. Your frontier is getting so efficient, you’re almost setting up unreasonable expectations that even you cannot fulfill. Your poor competitors will just have to muddle along somehow!

  • http://blog.marketo.com/ Jon Miller

    First of all, let me agree with Danny that I should have made it clearer from the start of the column that I represent a software vendor that sells B2B search marketing tools. It was never my intent to mislead anyone and I apologize that some of you were offended by what was perceived as a “sales pitch”.

    That said, I don’t think a software vendor claiming that in-house is the best approach is any different from an agency claiming that outsourcing is the best approach — and there are plenty of articles that make that claim. I guess that is what makes open debate so great!

    As Danny points out, the reality clearly falls somewhere in between the two extremes, and the right answer for your company will depend on your available time and budget. At a minimum, providing marketers with another option cannot be a bad thing.

  • http://www.prominentplacement.com StacyWms

    Jon, Jon, Jon…on the one hand, you’ve contacted me trying to sell me your solution, and on the other hand, you’re bashing me (well, agencies like mine) publicly. I really take issue with this. I see others have as well, but to add my own two cents…

    We are a full service search marketing agency, handling paid and organic search primarily for B2B clients. We understand B2B and we prefer B2B. We do not charge a percentage of spend — we charge a flat fee for our services so we have no incentive to artificially inflate our clients’ budgets or bids. Most of our clients have budgets under $10,000/month and they all get the same careful attention and high level of customer service.

    I can give numerous examples where we have taken over a PPC campaign that a client has managed in-house and have made improvements to it that have doubled and tripled their conversions while at the same time lowering their CPC and budget.

    There are so many “levers” available in PPC that it’s ludicrous to say that software can completely replace a skilled and experienced human being.

    Can software look at your web analytics and find keywords that are driving organic traffic to your site, and then add them to your PPC campaign?

    Can software determine a client with a limited budget should actually lower their bids so as to buy more (inexpensive) clicks with the same budget instead of fewer (more expensive) clicks?

    Can software determine whether accelerated delivery makes sense for a particular client or not?

    Can software determine the best match type for each individual keyword, or add appropriate negative keywords?

    Can software make intelligent decisions about content targeting?

    Can software write multiple versions of creative and analyze which is performing the best?

    Can softward analyze competitors’ ads to shape creative and ensure it stands out of the crowd?

    Can software move budgets between different PPC engines, depending on what’s performing best?

    Can software move the best performing terms into separate campaigns or ad groups with its own budget?

    Can software design and test different custom landing pages and analyze conversion rates?

    Can software set up different geographical campaigns (some using broad keywords but IP targeting and some using keywords with geographic descriptors in them that are visible nationwide), analyze the results, and adjust bids/budgets accordingly?

    Can software determine when it’s best to use keyword insertion and when it’s best to use static creative?

    Don’t get me wrong — I know software can be highly valuable for some functions. But if software can completely replace human thinking and creativity, I’ll eat my hat (and yours, too).

  • Internet Strategy Blog

    Why not market in-house and outsource PPC campaigns? We’re a pay-for-performance agency, and several of our clients run smaller campaigns of their own. We assume most of the risk while proving our expertise to clients who are already somewhat versed in the SEM world.

  • http://www.clearsaleing.com Mike Lanese

    With all due respect to Jon, I think he might be missing the point. The issue isn’t whether you’re dealing with a B2B or B2C company. Instead the issue is whether your client feels comfortable engaging in SEM activities on their own.

    A useful analog to consider is that of financial services. Back in the 90’s, Forrester Research developed a paradigm that classified financial services clients into 3 categories: soloists, delegators and validators. Soloists are generally active participants who prefer to manage their own accounts. With the development of trading technologies (e.g. Etrade) they finally had the tools with which they could disintermediate their brokers. Delegators, on the other hand, prefer to outsource account management to full service professionals. Despite the availability of trading technology, they recognize their limitations in knowledge and time and trust their full service brokerage to manage the complexity. Validators sit somewhere in the middle, often managing parts of their account, but relying on professionals for complex transactions and using them as a life preserver in case they find themselves in deep water.

    Applied to PPC, which category is best? Obviously it depends on the individual circumstances. If you’re an agency, SEM or technology provider, you have to understand in which category your client or prospect falls. Some will be comfortable with the soloist route while others will want to engage full service professionals. And some will want a little of both. The trick is to find who they are early and apply the right solution to the circumstance. Sometimes this means being disciplined enough to walk away from the job if your firm doesn’t really meet the client’s requirements.

    Although I don’t have the data to apply percentages to the 3 categories, my guess that, just as in financial services, the majority of companies (whether B2B or B2C) will fall into the delegator and validator camps. There will always be a place in the market, however, for a technology firm to provide software to the soloist companies.

 

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