DM News' Essential Guide to Search Engine Marketing: How Paid Search Engine Marketing Is Just Like the List Business…

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Paid search, also known as search engine marketing, and the list business are remarkably alike. And list brokers are ideally suited to offer SEM to their clients as a supplement to postal and e-mail lists. If you've thought about offering search to your clients but are overwhelmed by what appears to be simply too complex, then read on.

Imagine being able to test 10,000 targeted mailing lists, see results within a few days and make high confidence, on-the-fly decisions to enhance customer acquisition costs and return on investment. That's exactly what paid search is -- the list business on steroids.

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DM News' Essential Guide to Search Engine Marketing

Here's how paid search and lists are alike:

• There is a strategy to choosing which lists to test. In paid search, there is a strategy for developing a list of keywords to test. In the world of paid search, one keyword/engine combination equals one list/segment.

• The primary objective of testing lists is to identify the winners and roll out on them; improve marginal performers; and cut losses on the losers. Ditto with paid search.

• The creative can vary based on the list you are testing, or even down to an A/B split within a list. In paid search, copy can be written based on the keyword being searched.

• Each list is key-coded to track responses. Each keyword/engine combination is coded to track responses.

• In direct mail, there is a call to action to motivate consumers to respond. Same goes for paid search.

• Postal mail, e-mail and paid search are all evaluated on ROI-based metrics, such as cost-to-acquire or return on advertising spend (ROAS).

• List brokers instinctively know how to analyze list results and rollout. The same great skill sets are the cornerstone of successful paid search efforts.

There are a few differences:

• Search happens much faster. Results can often times be read and optimized within hours. Decisions need to be made quickly to take advantage of a constantly changing marketplace.

• Writing search copy is unlike any other form of copywriting. At the same time, you need to encourage qualified prospects and discourage unqualified consumers. There's a real art to writing search copy and it is much more influential in paid search than in direct mail.

• Search is an open environment where competitors know exactly what you are bidding for any given keyword. Costs are variables. This is not the case with lists, since there is no bidding and costs are fixed.

You probably know from reading trade publications that it is the opinion of many that paid search is the holy grail of integrated multichannel direct marketing. Like every other media before search, and every media that will follow, successful marketers use numerous media to grow their businesses.

List brokers must give great consideration to this new quandary. The realities are simple. If you can't offer search to your clients, you're falling behind the curve. The last thing you want is your client calling another list broker who offers integrated services that include SEM services.

So, assuming that you're sold on the need to offer search, what are your choices?

You can buy an existing search firm. Most of the reputable SEM firms (and there are very, very few) have been purchased or are not for sale. Additionally, the premium price you may be required to pay may take too long to recover.

You can build your own search division. Several list companies have tried to do this, only to find its extremely costly, requires expensive and experienced people and takes a very long time to get the campaign management process correct. It's a major investment that requires a major commitment from management. In summary, this is not an approach for the weak at heart.

You can partner with a direct response focused SEM provider. In this scenario, you can be in business offering search, literally overnight. Of course, you need to evaluate companies in this space to determine the best one to work with. Your client relationships are your business, so choose wisely.

Or, you could do nothing. That would be a mistake. Providing paid search services requires trust between the provider and the advertiser. For most direct marketers, their list broker is their most trusted vendor. It just makes sense.

So there are three choices available to you if you're serious about offering paid search services. Each option, as you would expect, has pro's and cons:

Buy an Existing SEM Company
  • Pro's

You own and control it

Adds a new source of revenues and profits

Gets you into SEM in a fairly short period of time

Access to new clients for potential list business

  • Cons

High financial risks

Technology, systems and infrastructure integration challenges

Not that many topnotch firms to consider

Build an SEM Division
  • Pro's

You own and control it

You keep all the profits

Custom designed for your direct marketing clients

  • Cons

High financial risks

Lack of available experienced personnel in both direct marketing and search

Technology packages will likely have to be modified

Approximate time to market is six to 12 months if you are going to do it right

You need a deep commitment from top management

Partner With an SEM Vendor
  • Pro's

Quick entry into SEM

No investment in people, technology or infrastructure

A good partner makes you look like a hero

High-profit margin for little investment

  • Cons

Very few direct response-oriented SEM vendors around

Risk of circumvention by vendor with clients

Technology, systems and infrastructure may have to be retooled for direct marketing clients

Poor SEM performance could negatively impact list business relationships

Do Your Due Diligence

Make sure to do your homework. Here are the major concerns you need to know when researching potential relationships.

• What is their level of experience in direct marketing and search? To properly service your direct marketing clients, you need a search system and people that know and understand direct marketing as well as search. One or the other is not sufficient, because the two are so intertwined in every aspect of SEM: keyword development, copywriting, landing page design, bid management, reporting and analysis.

• Who are its clients ("buy" and "partner" options)? Does it have any top direct marketing clients, or are the clients all non-direct marketing and smaller companies? Scale is important, so be concerned about companies with only small customers.

• How important is technology? Don't be seduced and fooled by people who tell you that you can simply enter a bunch of keywords into a computer, set up some rules, and let it run on autopilot. This is a violation of the direct marketing principle we hold near and dear. Our experience suggests that technology accounts for 20 percent of success and human analysts and strategists account for 80 percent. Technology is only good for capturing data and producing reports. Trained analysts are necessary to read those reports and make the best possible decisions for your clients.

• What are the direct marketing metrics the vendor uses? We have all grown up in the list business around such metrics as cost-to-acquire (CTA), lifetime value (LTV), return on advertising spend (ROAS) and others. When you evaluate a potential vendor or technology, you need to ensure that the system can tie back every single keyword/engine combination to whatever metric is desired. CTA, LTV, ROAS and others will vary between your clients and even within a given client, so this becomes a mission-critical issue.

• Determine if you can trust the vendor or people you hire. Whether you partner, buy or build, you need to be 100 percent sure your SEM offering is not going to let you down in front of your clients. If you are considering buying or partnering, ask for and contact references. "Google" the company and its staff. Read any published articles to see if the vendor's philosophies are in tune with yours.

• Is the reporting what you need? Determine what reports are most meaningful, and then make sure they are available on demand. You should be able to pull up reports online without having to request them and wait for them.

• Do the "Is this in my best interest?" test. Once you see how a vendor's system works, ask yourself if everything it does is in your clients' best interest, not the vendor's. At the end of the day, is it how you would do it if you had everything under your control?

Deciding to get into paid search should be an easy decision. Choosing the right path is a lot more difficult, but in the end, well worthwhile.

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