Back in 1997, Robert Kiyosaki wrote a book about personal finance called “Rich Dad, Poor Dad” that became an instant best-seller. Among Kiyosaki’s most important points is that the process of building wealth is difficult because many people fail to distinguish assets from liabilities. For example, most people regard owning a home as an asset, but when you add up taxes, depreciation, insurance, mortgage payments and the vagaries of an ailing housing market, it’s clear that homes more often behave like liabilities than assets.
The same principle holds true in search engine marketing with regard to in-house search teams. These teams are often deployed after a marketer has a series of unsatisfactory dealings with over-promising, underperforming SEM agencies. As I’ve pointed out in other DM News columns, these bad relationships are usually the result of inappropriate selection methods in which a narrow-minded focus on cost schedules and over-reliance on request for proposals practically guarantees that such a relationship will fail. Unfortunately, many businesses are unable or unwilling to examine these selection methods, and so the answer inevitably becomes “let’s build an in-house team so that we don’t get cheated by SEM agencies anymore.”
In-house search teams, however, come with their own set of costs which are only visible some time after the team has been formed and is up and running. Among these costs are the high ones associated with attracting and retaining qualified personnel. There is stiff competition for first-rate search strategists today; incentives to keep them around are costly, training is expensive, and employees, unlike fixed assets, are free to walk to pursue better offers whenever they want. The last thing any business needs is for a prized employee, after thoroughly absorbing all the inner secrets of a given business, to walk across the street to a competitor and head up its search marketing campaign.
Other costs associated with in-house teams are harder to measure, but equally problematic. While companies can often find personnel to staff search teams, such teams must usually work with licensed third-party campaign automation tools aimed at general markets, not the specific needs of a given business. Even if such teams include developers, these developers must work within the confines of software architecture that they do not control, which severely limits the degree to which this software can be customized to the needs of the business.
But the greatest costs of in-house search teams exist in “opportunity costs.” What makes these costs insidious is that they’re really only measurable in retrospect. How much market share has a given business lost to a competitor in the past quarter? What opportunities to maximize profits have been left on the table because personnel, which could have been sizing up new business opportunities, were mired in bid management issues or hassling with an independent service vendor over a poorly-implemented feature? Unfortunately, by the time these questions are asked, it’s often too late to remedy the situation, and the result can be dire for a business. Several companies that have thought in-house teams could provide better results than a good SEM agency have been literally driven out of the search market, and the same executives who enthusiastically approved the in-sourcing decision have been enthusiastically outsourced.
I won’t go so far as to say that in-house search teams are never appropriate. Sadly, there are some SEM agencies out there that have done such a poor job that their results can often be bested by in-house teams. But I’ve never seen a case where a first-tier, or even a moderately competent SEM agency has been bested by an in-house search team.
Being able to distinguish assets and liabilities often isn’t easy. Smart people make this mistake all the time, and it can keep them from real wealth. So it’s no surprise that it also exists in the business world. But if you really think your in-house search team is a corporate asset, I’d suggest that you read “Rich Dad, Poor Dad” before it’s too late.
