Hitmetrix - User behavior analytics & recording

RFPs are evil (Part 3)

I want to conclude my discussion of the role of RFPs in the SEM agency buying process by talking about price.

Sure, it’s a natural instinct among prospective clients of SEM agencies to focus, and perhaps even fixate, on price. After all, when you’re spending hundreds of thousands of dollars on search each month, small differences in agency management fees can add up to significant numbers.

Unfortunately, a narrow fixation on price can lead directly to selecting the wrong SEM, and any savings gained from contracting with an agency chosen because its fees were the lowest can be wiped out by subsequent losses incurred when this agency bungles a search campaign.

As we all know, paid search marketing is very much a “zero sum game,” which means that there only can be one winner at the top of any given SERP. Competition is fierce, the stakes are high, and the advanced segmentation technologies that the engines have given us have introduced a level of complexity that has never been seen before in any form of marketing. What’s clear is that unless one is fully prepared to win at search, one shouldn’t be in the game at all, and this is why several high-profile companies have recently abandoned search: they realized that search was just too daunting and difficult a game for them (and their SEM agency) to master.

For these reasons, I often liken the role played by a SEM agency to that played by a lawyer or advocate whose job is to win a crucial case. When one selects a lawyer, price is a factor that may enter into the hiring process, but if you’re trying to win a multimillion-dollar lawsuit, or fighting for your freedom, your decision is ultimately ruled by the attorney’s objective chances of winning your case. Consider two attorneys: Attorney A, who charges $600 an hour, but has a poor record of winning the kind of case you’re involved with, and Attorney B, who charges $800 an hour but has a flawless track record with the same kind of case. Who would you choose to represent you?

Most sensible people would choose Attorney B, and yet it’s clear that the same kind of commonsense thinking does not always enter the equation when otherwise rational businesses evaluate SEM agencies. I can only ascribe this narrow mindset to a misunderstanding of the central importance of Search in one’s strategic marketing plan, and also to a false belief that all SEM agencies are basically the same; i.e. have roughly the same chance of designing and implementing winning search campaigns. This is, in my view, the only possible reason why price looms so large in the SEM agency selection process. To put it bluntly, this kind of fallacious logic embodies the old “penny wise, pound foolish” adage.

Until clients begin to understand the wide range of differences in practices, philosophy, technology, and client services that exist among SEM agencies, this industry risks becoming locked into a never-ending cycle in which the wrong decisions are made for the ostensibly “right” reasons.

My best hope is that the decision-making environment will soon change and more CEOs, CFOs and CMOs will become involved in the SEM agency selection process. CEOs know how to select high-level partners, and they choose very carefully, knowing that they are ultimately responsible for this decision. As I mentioned earlier in this series, search is too important to be left to low or mid-level underlings who, while knowing a great deal about the mechanics of search, are not qualified to make the kind of strategic decisions that are the proper province of senior management.

Once CEOs and senior managers wake up to the fact that selecting an SEM agency is a strategic decision as important as selecting an outside law firm, accounting firm, or ad agency, and begin exercising the proper degree of authority over this decision, this industry can begin moving ahead. My hope is that this process, already under way at certain companies whose senior management have begun to appreciate how important search is to the enterprise’s bottom line, will happen sooner rather than later, because the stakes, both for the search industry as a whole, and for enterprises seeking to profit from search marketing, could not be higher.

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