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Why you need to outsource search
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Why should I outsource?
Strong technology. SEM has stretched far beyond just the technology of bidding systems in Google. External resources continue to invest in technology that will improve their efficiency so they can be more profitable. Their continual investment in technology is spread over a wide range of clients, and thus is a more efficient use of those dollars. Your company will never invest what is necessary to continually upgrade the technology; it's just not efficient to. If you are spending and continually sinking money into technology in an internal SEM program, you are wasting resources. The only reason you are probably getting away with it is that SEM is so profitable on the whole that you still make money.
However, you are eating into your own profitability pie. Your company is not in business to make SEM. Your company makes products or has a service. That is your expertise; stick with it.
The algorithms in use by the major players are rapidly becoming more and more intelligent. When Google makes a change, they rapidly adjust their systems to compensate. They employ more people who actually call themselves "scientists," with more pocket protectors than you have. How many scientists are on your staff? Remember that kid in the back of class who was a social leper but went to CalTech or MIT on a full scholarship? They work at these big search players.
Their systems are designed to make their companies more efficient, automating as much as possible. That allows the systems to scale your programs efficiently. The problem I outlined earlier, of linearly scaling value of a non-linear system? Strong technology solves that problem. The real competitive value in SEM is the long-tail. There are keyword combinations that are not searched often, but, if you have enough of them, create real value. It's where your competition is least likely to play, and thus where you can get the most value.
But what their technology really provides is a different business model for you. Most clients, unfortunately, concentrate on the bid price for each keyword. This is both inefficient and does nothing for your business. Think about it. It is not the bid price that it is important to you, it is the conversion price. Buying 10,000 keywords at 5 cents apiece is irrelevant if no one buys your product. These systems dynamically adjust your bid pricing based on conversions.
What does that mean?
It's simple. When a consumer buys a product at your site or goes to any page you consider a conversion, the SEM company places a pixel on that landing page. These are often called "thank you" pages and display something along the lines of "thank you for your purchase." The company knows which keyword landed at that page and caused the conversion. You can attach a value to that conversion, so the system dynamically adjusts the bid pricing for that keyword. That keyword, in essence, is more valuable. If, for example, that keyword cost $1, and the value you set for that conversion is less, it will adjust your bid pricing to get more customers, maximizing its effect. It's the conversion that matters, because that is what impacts your business. You could be getting lots of clicks on 10-cent keywords, but it does not matter that they cost less if none of them covert. They actually cost your business more.
Even more unique is that some of these systems look at your keywords at a portfolio level and adjust the price to maximize customers across a whole range of keywords. It does all of this, and continually gets customers for you at the most efficient level. A human is just not able to make those decisions in a timely manner, nor is it efficient for them to do so.