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The Agency and SEM relationship

Thursday, 22 September 2005

There seems to be more and more of a battleground for search engine marketing business is between the "traditional"  agencies and the raft of specialist, dedicated Search Engine Marketing (SEM) agencies.  With the huge increase in paid search engine spend (forecast by Forester to grow 30% in the US this year and to hit $11.6 billion annually by 2010), the incentive is there for traditional agencies to venture into the search marketing arena.  The issue for these agencies though is the disparity in the skills required to run their more conventional campaigns and those required to drive maximum ROI from search marketing. 

How do the creative and media buying expertise of the traditional agency stack up against the skills required for SEM?  Not particularly well seems to be the answer - specialist paid search agencies seem to be thriving.  More and more clients are understanding that paid search cannot be justified without the level of in depth tracking, analysis, testing and continual campaign updates that typically only dedicated agencies with dedicated systems and experienced personnel are able to deliver. 

Things look even rosier for the specialised SEM agencies when the area of natural search engine optimisation (SEO) rears its head.  The skill sets required for SEO fall even more firmly outside of the remit of the traditional agency.  SEO is a vital part of the search engine marketing mix given that over 65% of search engine users prefer natural to sponsored listings and the obvious synergies between natural SEO and paid search management means that it makes an awful lot of sense for the two campaigns to be managed by a common, dedicated agency.

The interesting question is to what extent these issues will lead to traditional agencies acquiring specialist search agencies and bringing their skills in house.  There has been some consolidation within the industry, with events such as the acquisition of Performics by Doubleclick for $58 million in 2004, but there remains to be significant movement in the UK market.  Maybe 2006 will be the year that sees wholesale consolidation in the marketplace and finally enables traditional agencies to deliver effective Search Engine Marketing solutions for their clients.


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