Four things that could kill the SEM industry

Any guessing what my latest gripe is? The idea that this whole gigantic SEM business, the business that’s single-handedly propped up the online advertising industry for the past several years, could go “poof” faster than you can say “GooglePlex.” Before you call me paranoid, you should know that I’ve lived through my fair share of technology industry shakeouts and crashes, and in my view there’s more than enough froth and funny business in the SEM industry to justify genuine concern and caution. So without further ado, here’s my current list of four things that could kill the SEM industry:

1. No improvement in SEM agency performance

The first time that a prospect walked into my office and spent 20 minutes ranting about the various ways that his previous SEM agency had screwed up his search marketing campaign, I wrote him off as a complainer and a malcontent, and concluded that his experience was surely an anomaly. But today, after having hundreds of such conversations over the past few years, I’m convinced that the real anomaly is to find an SEM agency that actually delivers on its promises. In a perfect world, the market would have solved this problem by weeding out the underperformers and rewarding those agencies that actually deliver results. But for a complex set of reasons, including institutional inertia, poor selection practices, and a widespread belief that “all SEM agencies are the same,” the market is anything but rational, and lots of marginal agencies have been given a free ride. Consequently, the whole SEM agency sector is perceived by Corporate America as charlatans and tricksters, which tarnishes everyone who works in it.

2. Cancerous click fraud

Sometimes I’m amazed at the short attention spans of people in this industry, and how the herd mentality seems to rule their behavior. Every year or so, the click fraud issue, one of the most damaging, confidence-eroding problems this industry has, rears its ugly head; people fret and blather on about it on various committees, and then everyone goes away to study the problem. But there has been zero meaningful action on click fraud, even though marketers continue to suffer from it. The search engines can issue all the assuring press releases they want about how they’re developing new secret sauces to fight click fraud, but unless they can demonstrate the effectiveness of such counter-measures, marketers are justified in regarding such announcements as happy talk, not hard action. Click fraud is like a serious dental problem: it doesn’t go away by itself, but just gets worse as time goes on, and can ultimately kill you if you do nothing about it.

3. Rationalization of copyright law

Somehow, it’s gotten into people’s heads that what search engines do when they scrape the content from your site, including images and multimedia objects, and display them in areas where they, not you, make money, is a process magically protected by an immutable legal loophole called “fair use.” But “fair use” isn’t written in stone: it’s just a loophole that can be closed if and when the courts decide that an exception originally made for journalists and researchers has been unfairly exploited by vast commercial concerns. Google and the other engines have legions of well-placed lawyers and lobbyists whose sole job is to keep this loophole open, but the last time I looked, the US court system wasn’t for sale. In effect, the whole search industry is only one legal decision away from extinction, at least in its present form.

4. User Revolt

The more that search engines peer into our lives, the more likely that a significant breach of personally identifiable user data will occur. If enough users determine that search engines are spying on them or are careless with their mined data, their reaction will be swift and severe, and today’s search darling will become an instant pariah to be avoided at all costs. Frankly, I’m amazed that data breaches don’t happen more often than they do, because all it takes is one unhappy employee with a DVD or a purloined password to single-handedly destroy the reputation of a multibillion dollar online company. If you don’t believe me, ask AOL, whose brand equity was beaten to a pulp a year ago when it leaked Google’s search data to an unsecure Web site.

Have I missed any other good reasons to be concerned about the future of the search industry? Send me some e-mail and let’s chat!

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