SEM is a form of Internet marketing that involves the promotion of websites by increasing their visibility in search engine results pages (SERPs) through optimization and advertising.
The decision whether to insource or outsource paid search can be daunting, regardless of whether you’re thinking about starting to advertise on paid search or have been advertising on paid search for years.
For small businesses without large marketing budgets, this decision becomes even more complicated. Small business often suffer from a lack of marketing budget to hire an outsourced paid search agency or, as a result of being burned by outsourcing in the past, lean towards insourcing their paid search marketing going forward.
For everyone else, the following article assumes that the budget exists to either properly insource or properly outsource your paid search efforts.
Insourcing Paid Search
If your company is going to insource, you absolutely need to hire someone who lives and breathes paid search marketing. And I don’t mean that you should hire someone who worked for a paid search agency for a couple years and only learned how to use a single, specific third-party paid search software.
You need someone who tirelessly reads and consumes industry paid search blogs, white papers, and research, and then gives back to the paid search community with guest articles, guest blog posts, and participates in SEM conference discussion panels.
This person needs to have the mentality that everything they read is a hypothesis — meaning that they should be willing and able to test every assumption to determine if that assumption holds for your specific business.
When this person hears someone within their business organization say something like “Obtaining a quality score of 10 is impossible for non-branded keywords” they internally cringe and then set out to disprove that theory, either by showing existing data refuting the claim or by designing experiments to confirm the validity of that claim.
This person should also view themselves as a scientist, someone who uses the scientific method to test inputs (campaign hierarchy, ad text, keyword mix, etc.) to the Google Paid Search Algorithm (a.k.a. Black Box) and determine the how those inputs affect the outputs (Quality Score, Ad Rank, CPC, ROAS, ROI, etc.)
Are you getting the impression that this person will not be cheap? That’s right, this kind of paid search experience and capability will certainly warrant a premium in the marketplace and only those corporations with the commitment to excel in their efforts to maximize their Paid Search ROI will have the determination and marketing budget to hire someone of this caliber.
Now, assuming that you’ve found your paid search champion, here are the advantages to insourcing paid search:
Insourcing Paid Search Advantages
- Total control of the process — You know your business better than anyone else and can skip the process of having to explain how your business works to a paid search vendor.
- More change agility — Outsourced paid search vendors service anywhere from a handful to a few hundred clients with each “paid search manager.” By insourcing, you do not have to wait for your vendor to implement your changes.
- Internal education — Your paid search champion can conduct conference calls or webinars for internal consumption to educate the business stakeholders as to the capability and limitations of paid search as an advertising medium.
- Internal mediation — siloed business units within a large corporation will often “compete” for the same keywords, driving costs up and ROI down. Your paid search champion can objectively evaluate the situations and determine the course of action that will maximize profit for the corporation, rather than for a specific business unit.
Outsourcing Paid Search
If your company is going to outsource, you need to make sure that the company that you hire has a paid search champion on their staff at a minimum, or ideally, working directly on your account.
How do you determine if potential paid search agencies have that paid search champion? Ask to meet with the person who will be directly managing your account in person prior to signing on the dotted line. In this meeting, ask that person the following questions:
Outsourcing Paid Search Questions
- “Given that it’s impossible to obtain a Quality Score of 10 for non-branded keywords, what quality score can we expect to see for non-branded keywords?”
— If they say anything other than refute your underlying assumption, your ROI will not be maximized by working with this firm.
- “We don’t want to advertise on branded keywords since they are a waste of advertising dollars, so how do you plan on capturing clicks of users who use our brand name as part of their search phrase?”
— The proper response to this one should be that you should first test whether branded keywords are indeed a waste of advertising dollars. This test has an added benefit of generating the data for the “long-tail” phrases that contain your branded terms for later use in branded phrase or exact match ad groups.
- “We’ve heard that remarketing is an effective tool for paid search. What are your thoughts on remarketing?”
— This is more of an open-ended question that a) checks to make sure they understand what remarketing is and b) allows you to evaluate their communication skills. Ideally, they should be able to explain in several sentences what remarketing is and why you should use it. You definitely don’t want to get a single word or single sentence answer on this one.
- “We typically achieve variable ROIs using other marketing channels such as w% for television ads, x% for radio ads, y% for email list rentals, z% for 3rd party newsletter features, etc. What ROI can we expect to achieve with your paid search services?”
— The answer here should not be a set percentage, nor should it be based on any of the percentages that you gave in your question since the specific ROI for a paid search account varies from business to business based on a number of factors, including landing page conversion effectiveness, website speed performance, paid search budget, conversion goal (i.e. online purchase vs. online lead generation), etc.
- “Given that it’s impossible to target demographics for Google Search and Search Partners, how do you propose to limit our ads to only those potential customers that we want to click on our ads?”
— A good answer here is that the ad copy can be written in such a way as to encourage your target demographic to click on your ad while discouraging others from clicking on your ad. A better answer is that it is not impossible to target Google Search and Search Partners based on certain demographics such as annual household income, number of children per household, or maximum education level — subscribe to my newsletter to be notified about a future article on how to do this.
Outsourcing Paid Search Advantages
- Less risk — It takes a lot of time, effort, and money to hire a paid search champion. If you’re not sure whether paid search will be a long-term marketing channel, outsourcing is a good way to test the waters until you’re sure that you want to commit long-term and bring the process in-house.
- Lower cost — Most paid search agencies charge a fixed percentage of your paid search spend, with some minimum monthly charge to account for very small accounts.
- Less exposure to “meeting paralysis” — Let’s face it, some internal corporate meetings are simply a waste of resources where an email would have sufficed. Just make sure you don’t eat up your agency’s time by requesting too many “status update meetings” which simply detract from the time they will spend working on your account.
Should you Insource or Outsource your Paid Search?
The answer is that it depends on your budget and commitment to paid search.
Insourcing requires more budget and commitment to find the right talent to maximize your ROAS and ROI.
Outsourcing is a lower risk, lower cost alternative, but can be ineffective if you hire the wrong agency.
That’s my opinion, what’s yours?
Long tail keywords are the cheapest and most cost efficient way advertise — cheapest due to reduced competition and most cost efficient if used in conjunction with landing pages tailored for the specificity of the keywords.
A mature, properly managed ppc account has many negative and long tail keywords. The “head” and “shoulder” terms typically comprise 20% of the overall number of keywords and the long tail the remaining 80%. However, from a clicks and conversions standpoint, those numbers are often flipped, with the long tail keywords generating a much smaller number of conversions proportionately than you may expect.
To understand this situation, you must first understand how paid search relates to the customer purchase cycle.
PPC Advertising Customer Purchase Cycle
One of the great aspects of paid search advertising is it’s ability to influence the three stages of the customer purchase cycle, from Awareness to Purchase, via the use of display ads, search network, branded, and non-branded keywords.
Non-branded keywords, especially those terms that are generic or only tangentially related to the product or service offered, tend to be the first interaction in the chain of interactions that lead to a purchase. Example: “fun things to do”
Conversely, branded keywords tend to be the last interaction just prior to purchase, after the potential customer has researched the product, compared alternatives, and has become comfortable with the brand. Example: “samsung”
If every customer could be perfectly tracked from first interaction to last, you would see that long tail keywords provide “assisted conversions” while branded keywords tend to get the majority of the final interaction “conversions.” This situation would allow us to exactly quantify the affect the long tail keywords have on revenue and leads. Unfortunately, it is difficult to properly track the customer from first click to last given today’s multi-device, multi-location world.
It’s a multi-device, multi-location world out there…
Google recently published a study titled “The New Multi-screen World: Understanding Cross-Platform Consumer Behavior.” This study highlights that 90% of consumers use multiple devices (screens) to perform tasks, both simultaneously and sequentially.
The practical application of these findings as related to paid search are:
- Work + Home — Consumers may start the search for a product on one device at work (i.e. long tail, generic keyword like “smartphone for business people”), then finish at home using a different device (using a branded term like “samsung smartphone”). In this scenario, the generic keyword “smartphone for business people” will show a click, but no conversion, while the branded keyword “samsung smartphone” will show both a click and conversion. Note: the generic long tail keyword “smartphone for business people” won’t even show an assisted conversion since multiple devices were used.
- Paid + Organic, Multi-device — Consumers may begin their search via a paid search click for “board games” on a mobile phone, but may finish later on their tablet via a organic search click via the keyword “monopoly”. In this scenario, the paid search keyword “board games” gets a click, but no conversion while the organic term “monopoly” will show both a click and a conversion. Note: Again, there is no assisted conversion for the paid search term since multiple devices were used.
Google’s Adwords Team is working on it
If users are logged into their Google account at work and at home, Google *should* be able to consolidate data points acquired across multiple devices and networks into a single transaction stream.
Even if Google is able to pull off this data consolidation, there is no guarantee that your customers will be logged into their Google account on their work computer, home computer, cell, and tablet at all times.
Where are all the long tail conversions?
The long tail keywords primarily assist your branded conversions.
If prospective customers don’t find your website in the early part of their purchase decision process, your product/service will not be in their final consideration set. Put another way, if not for the long tail keywords, the branded keywords may not have captured the conversion at all.