To Centralize Or Decentralize SEM – That’s The Question

Having been through a number of re-orgs over the past few years, I’ve been thinking lately about SEM and direct marketing within the larger organization, and it seemed like a good time to take a step back and look at the different ways companies organize around SEM, and which models make the most (or least) sense at any given time.

The bottom line is that you can make any organizational model work if you have the right people in place – smart, flexible people who can see the big picture and draw the right amounts of dotted and hard lines to ensure accountability and align incentives.

Let’s go ahead and take a deep dive into a couple of these models and how they shake out in real organizations.

Centralizing Around SEM & Other Marketing Channels

Centralization makes the most sense if you have new marketing leadership (new CMO, SVP, etc.) and Marketing needs to establish its own identity within a company. This is what happened at Yahoo! when we hired a new CMO several years ago. We had been without one for some time, and the incoming CMO wanted to build a global, integrated marketing team.

We accomplished this over time and in doing so we rebuilt most of the marketing functions at Yahoo! with a global perspective. In our direct marketing group, we even had one person devoted solely to ‘international’, making sure that our direct marketing best practices were disseminated around the world to regions like APAC and EMEA.

So what does this mean for managing PPC in a centralized marketing organization? Mostly, it means that SEM likely follows a ‘shared services’ model. In this model, our SEM teams work more or less as an internal agency, engaging with the various business units (BUs) as internal ‘customers’.

Because we don’t report to the same people as our customers, it’s critical to maintain clear communication channels. If you’re in this world, make sure you have regular face to face meetings with your customers, and you have well-oiled approvals processes for keywords, creative and the like.

Over-communicate all budgeting issues, lest you take a BU marketer by surprise and ruin a perfectly good working relationship. Here’s a typical centralized marketing org chart for a large company:

This is what it looks like when SEM is part of a centralized marketing group

Speaking Of Budgets

Where do PPC budgets live in this centralized world? Funny enough, I’ve seen it work both ways. When we were centralized as a marketing org, at different times the budgets actually lived in Marketing and then in the BU. It works OK either way, but there are some things you’ll do differently as a result.

For example, when our marketing group was centralized but the budgets lived in the BU, I had to create a lot of process around moving budgets. I’ve written about it here, and the central theme is that SEM budgets need to be mobile in large organizations with multiple BUs. Reason being, money will need to be moved from under-performing businesses to over-performing businesses in order to maximize return to the company.

When Marketing is centralized and the PPC budgets all live in Marketing, it becomes much easier to manage of course, because SEM managers can move budgets at will. The risk in this case is alienating your internal customers, so just as noted above, communication is key.

De-centralizing The Marketing Organization

De-centralizing is helpful if there is a region or group of business units with which Marketing feels like it should align, perhaps because these businesses are of a higher priority within company, or if they’re earning the lion’s share of the company’s revenue.

In this model, the whole marketing organization lives in the region or BU, with marketers, salespeople and product teams all reporting into the head of the BU or region. The advantages here are efficiency and alignment. PPC budgets in this world need less mobility, and there’s less ambiguity about how the money should be spent. Marketing’s objectives are the same as BU goals.

Decisions can be made quickly because there are fewer cooks in the kitchen, so to speak. Keyword and creative approvals are still necessary, but if my boss is your boss, I know right where to go to escalate and resolve any delays or disagreements. All good, no?

The downside is that marketing best practices are more challenging to share across regions or businesses. What works for one business may not get translated to another. And international? Well, that becomes tricky as well. You’ll be hard pressed to find funding for that international marketing manager, as there aren’t really any incentives to ‘go global’.

Here’s what a de-centralized org chart might look like:

SEM and other marketing channels in a De-centralized Organization

Wither SEO?

On a side note, you might have noticed that in the org chart above I have SEO listed under ‘Product’. In many companies, there is an eternal ‘tug-of-war’ for SEO, usually between Marketing and IT.

At Yahoo!, we’ve pretty much decided that SEO belongs in our product group. I wrote a column on this a long time ago. In Marketing, we build tools for SEOs, but we leave the work for those folks in Product. The reason is that in a big place like Yahoo!, the product development process is where the real SEO work has to take place. If you try to drive it from anywhere else, you fail. Believe me, we tried…

That’s all I have on organizational models for now. See you next month!