For the last five months I have entrenched myself in the realm of SEM management, specifically from the standpoint of the faculties that marketers use to manage SEM campaigns.  While it is expected to find many small SEM shops, small agencies and direct advertisers using extensive Microsoft Excel worksheets and complicated manual workflow to manage their SEM, it has been shocking to see how many larger online spenders (+/- $1 M per month) are also operating on a manual basis.  There are still many firms that have integrated some technology into their workflow and then a fewer number of agencies that have built proprietary workflow that includes some level of technology.  But the overall impression that I have gleaned from my experience thus far is that (1) SEM advertisers and agencies are either afraid to break from their manual processes, trading inefficiency that is known for potential significant efficiency that is associated with change and the unknown; and (2) the impression of the technologies that are available in the market do not necessarily meet the necessary requirements of an SEM.  The latter of these two observations stems from poor experiences with one or more vendors in the space.

While the latter statement has some validity to it under certain circumstances, it is also biased based on a lack of understanding for the generational development of SEM bid optimization and campaign management tools.  Additionally, the polarized paradigm in the market that separates three kinds of companies makes it difficult for SEMs to distinguish true solutions.  What I mean is that there seems to be three kinds of companies in the space:

The first is the technology that really works and addresses the market need, but nobody knows about it because of poor sales and marketing ability.

The second is the technology that really works, but is irrelevant because it doesn’t meet any addressable need.

And the third is the technology that is sold really well but is really a collective set of vaporware or manual tasks behind the scenes.

Overall my impression is that the really good technologies haven’t been brought to market well and the ones that have been brought to market well aren’t the good technologies.

To further my understanding of the space, I have managed to secure demonstrations of several of the players.  And I have shared conversations with customers of quite a few of these different service providers.  The summation of the solution space being segmented by generational technology was first shared with me through a conversation that was had with a large agency.  The description was that there are three generations of SEM tools.  The 1st generation was the acquired technologies like GoToast (acquired by Atlas, now Acquantive).  These technologies were integrated with the display ad servers in order to give the ad servers the ability to offer search tracking and measurement.  Pricing is based on a CPC basis, per click not per thousand.

The 2nd generation SEM technologies came out from Omniture and Webtrends – the analytics companies that looked to integrated SEM bid management so that direct response could further drive site-side analytics.  The extent of bid management was new and highly advanced for the time and the pricing model is closely tied to the analytics platform; so if you are using the analytics, the bid management tool is attractive.

The 3rd generation SEM technologies have come to the scene over the last year or so and represent the most advanced level of tactical automation, through rules-based management of campaigns.  Providers like Marin, Kenshoo, SearchForce and Clickables challenge the 2nd generation tools for SEMs that do not use the analytics tools with far more advanced features and aggressive pricing based on a percent of spend.

The polarity of the tools described above has become apparent to me through my association with SearchForce, which was preceded by a fair amount of due diligence.

Marin Software is the leader in the space.  They have great sales and marketing and the product has come a long way since its inception 18 months ago and client satisfaction seems to be moderate to good.  Some of the common complaints include a differentiation between sales and deliverables.  This speaks to the vaporware comments made above.  Marin seems to have a difficult time on-boarding clients and campaigns within a reasonable period of time.  During the sales cycle, tests of small campaigns with 10,000 to 15,000 keywords load fast and demonstrate an easy process.  But when actual campaigns are loaded post contract signing, campaigns with millions of keywords, the time to on-board is days or even a week or longer.  This is not a single occurrence but a commonality voiced by many current and past customers.  Customer service has a solid reputation, but pricing incorporates utilization of services and support.  Pricing is tiered based on spend, allowing for even the smallest SEM to come onboard.  But then prioritization of services is allocated to the larger spenders.  Training is simplistic, leaving the customer to ramp on their own or through call-ins for support, which is not unreasonably withheld.

Kenshoo is certainly the provider of the best eye-candy.  Their tool has the least integration capabilities in terms of the major engines and bi-directional synchronization.  But they are working on it and will catch up fast.  They are an Israeli-based company with a small footprint in San Francisco so most of the tech support and assistance is provided from abroad.  Certainly the ability to influence product roadmap is less significant than with Marin and SearchForce from the perspective of a larger SEM.

SearchForce has impressed me with the most advanced technology.  Not through my biased association with the company.  But because of the many meetings and demonstrations that I have sat through with prospective customers – customers that are not using a tool and customers of Marin and Kenshoo.  The consistent message is that nobody seems to deliver on all of the promises.  Nobody seems to have true strategic campaign management that is dynamic.  Nobody has streamlined on-boarding.  Nobody seems to have multiple conversion tracking capabilities beyond their own pixel.  Nobody seems to have the ability to deliver a high level of service to create a partnership that streamlines knowledge exchange and promotes true campaign performance improvement.  I can go on.  But all of these points are met by SearchForce.

So what is the problem with SearchForce?  They don’t market well or promote themselves through an aggressive sales program.  They have chosen not to engage with small SEMs because they want to offer a very high-touch level of service that will only return value to the company with SEMs that justify ROI with a spend level that is significant.  But that’s not wrong.  Partnerships are absent in this industry.  Sharing cross-customer knowledge of SEM practices that leverage powerful technology embraces relationships to boost campaign performance and accelerate operating efficiency.  So my challenge is to figure out the right balance of creating a sales energy that will increase a market penetration for this company while marrying the company to this level of service that is uniquely different and extremely valuable.  The feature differentiators are proof-positive to a customer and the fact that one platform actually delivers on the pitch over another are all just refreshing.  But a zero-percent attrition rate on customers is a result of a partner mentality and not a customer service mentality.  The goal is not to be the biggest kid on the block with the most revenue but rather the most advanced technology with the deepest relationships
leveraged by the most advanced SEMs.

At the risk of letting this post swing from objective to totally subjective, I will rope it back in.  I am impressed by all of the technologies out there.  Most of all I am impressed by the rapid growth of this space.  Everyone needs to find a way to do what they do better, cheaper and faster.  Bid Optimization and Automation tools accomplish this.  Some of these 3rd generation technologies boast a 5:1 reduction in workflow – reducing 5 hrs of SEM work into an hour.  And some of them can actually do it.  The improvement in productivity translates into operating efficiency but also opens the door for more business and more time to become more strategic about the business an SEM is managing.  These tools also deliver the ability to improve campaign performance.  Depending on he algorithm – and they are truly different from one tool to the next – there is the potential to truly improve campaign performance.