From AdWeek's interactive daily:
Search-Specific Agencies Fight for Survival
NEW YORK A few weeks ago, dozens of search engine marketing agencies (SEMs) gathered in New York at the Search Engine Strategies Conference, joining vendors and clients numbering in the thousands, all hoping to sell their wares and learn a few tricks of the trade. But many SEMs also likely wondered whether the event might be their last trip to New York.
As search engine specialists have proliferated, hoping to pounce on the ad dollars pouring into the medium over the last few years, their existence may be threatened by the very companies they have been beating to the punch: interactive and traditional media agencies.
SEMs have prospered by selling clients on their expertise while saving online media players from the complicated technical aspects of managing search campaigns, like bid management and algorithms.
Yet at the conference, many expressed frustration over dealing with insecure agencies, while also admitting to fears of getting wiped out by Madison Avenue bullies.
"The search agency space right now is in the same place that the online agency space was five to seven years ago," said Stuart Bogaty, CEO of mSearch North America, which was recently launched as a sister agency to mOne. "The smaller guys are either going to be acquired or will not be able to support their businesses."
It remains to be seen if SEMs will thrive, get snapped up by agencies, or whether agencies elect to build out their own search expert teams, like mOne. There are reasons why agencies, even pure interactive shops, have been hesitant to do the latter.
"I know of agencies that have made a strategic decision that 'search is not us, we are a creative agency,'" said Sarah Fay, president of Isobar U.S., part of the Aegis Group. As the head of Carat Interactive, Fay led Isobar's acquisition of search firm iProspect late last year. "[Search] is a huge undertaking," she added. "It is incredibly hard to build from scratch."
Fay said that for many agencies, search also isn't perceived as a moneymaker, given its low-cost pricing model and modest creative.
Yet despite the obstacles, most think that the dollars, as well as the client relationships attached to search, are too tempting for agencies to ignore for long. "I definitely believe that agencies have to build it or buy it," said Will Margiloff, CEO at search specialty firm Exact Advertising. "Most agencies want to control the client's budget from soup to nuts."
Margiloff, who admitted that his company could be acquired, said he believes independent search firms that can offer proprietary technology and strong client relationships will survive. "I believe that [the SES conference] will be really different next year," he said.
Jay MacDonald, an analyst at DeSilva & Phillips, added that a flurry of acquisitions is imminent, yet it all may be for naught. "As technology improves, the need for optimization will go away," he said.
--Mike Shields
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Note from Reid: I agree with Jay MacDonald's assessment. I believe that the goal for many search engines would be more-or-less to take the human element out of search engine results. Regardless of what you do to the page, the user should receive the most relevant results, not just who "optimized" the page the best.
It is two systems working against one another. SEM's are dependent on the engines, but engines are not dependent on the SEM's (except where PPC is concerned).
Posted by Reid
3:19 PM
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