One tenet taught at most business schools and exemplified by successful corporations such as Wal-Mart is "to gain efficiencies, eliminate the middle man." Your paid search agency is a true middle man between you and search engine media providers, so are there benefits going straight to the proverbial well? With the need for efficiencies in online marketing, should you outsource campaign management directly to major media players such as Google, Yahoo, or Microsoft?
Over the years, I've seen clients leave agencies to be managed by Google, Yahoo, and Microsoft, and I've also personally taken over clients who had previously been managed by Google and the others. Is publisher-managed media a smart move? Is it worth the cost savings? Is this a future trend threatening the agency world? Clearly, being from the SEM agency side, I'm a bit biased, but I think the true costs of going publisher-direct far outweigh the dollars saved.
As I see it, the pros and cons in this debate can be grouped into four categories:
- Data privacy and integration
- Single-publisher focus
- Conflicts of interest
Let's start with the major benefit of working directly with a publisher: You don't have to pay agency fees. Yes, if you are large enough, Google and others will manage your campaign(s) with their vertical or regional teams for free. That's a 10 to 15 percent instant savings. However, I'd argue that the overall ROI from working with an agency will be higher, even after factoring in management fees. Now this is not the case with just any agency, but the good ones will find ways to add value through campaign optimizations and insights to fuel other marketing activities that, when measured and aggregated, well exceed the cost of their services.
Data privacy and integration
There is major concern in Washington, D.C., these days about online data collection practices and general search engine data privacy. At the same time, there's also a belief that integrating data (and the models placed on top of data) is the future of marketing. I suspect Google is working to build an integration portal into Google Analytics that includes a central repository to meet client needs and potentially provide media mix modeling and improved attribution, but it's not available yet. Further, with Google venturing into other advertising media (TV, mobile, ad exchanges), it will have a direct pipeline to feed other forms of media into a data warehouse.
Between media companies or agencies, who do you trust with performance data such as product margins, low performing markets, and future marketing plans? Who can share cross-media performance (i.e., high performing natural search keywords to add to the paid search stable, or DMAs where radio has a high ROI on offline sales)? If you were a media company and knew the value of a commercial or keyword placement was worth double to the advertiser, would you be tempted to raise the price? When a company makes more money with increased competition, can "diamond in the rough" keywords be kept proprietary?
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