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Thursday, September 1, 2005

In-House SEO and Outsourced PPC: A Good Match or a Couple of Oxymorons?

Guest-writer Terrence Gordon is a Search Engine Optimization professional and CEO of Performance SEO. Living in LA, he’s been involved in handling online revenues for companies such as Sony and

Upon reading SEMPO’s (Search Engine Marketing Professional Organization’s) recent release of their 2004 report on “The State of Search Engine Marketing”, I found some interesting yet somewhat exasperating statistics regarding the outsourcing of Paid Search (PPC)* versus the outsourcing of Organic Search Engine Optimization (SEO)**. Allow me to indulge and please bear with the numbers – there is a point on the horizon. I would also like to thank SEMPO for the diligent research.

According to the study, $4,087,219,374 was spent on Search Engine Marketing*** in 2004. That’s a nice big growing number by the way. Of that $4.1 Billion, 82% went to PPC and 12% went to SEO (the rest to Paid Inclusion and Tech). Although I don’t agree with the allocation of these companies’ ad dollars, that’s probably an entirely separate discussion. Regardless, no harm done here – yet.

* Paid Placement (aka Paid Search, aka Pay-Per-Click (PPC)) refers to search engine listings that are paid for by advertisers on a per-click basis.
** Organic Search Engine Optimization refers to the enhancement of a website to achieve the “Organic” search engine results versus the paid results.
*** Search Engine Marketing (SEM) is a term which labels the industry and encompasses Paid Placement, Organic SEO and Paid Inclusion.

Now, of the advertisers surveyed, 76% of them said they outsourced their PPC Management to an SEM agency or Search Media Firm. For those that don’t know, outsourcing PPC Management consists of paying somebody to construct your keyword focus implement it on Google / Yahoo!, etc., enter it into another 3rd party’s software which tracks data and conversions, and then “manage” the keywords according to what works and what doesn’t. I’m not knocking it.

What people don’t know is that anyone who has utilized PPC Management software will tell you that 90% of the work is done by the software itself. Once the program is up and running at its optimal performance, it’s humming and requires very minimal attention; especially if you are a service-oriented business with static keywords and non-evolving, product-specific terms. The software can actually track what hour of the day you get the best conversions and then run your ads only during that time. Contrary to what you would like to believe, your PPC Management firm isn’t paying someone with an IT degree to sit by a computer 24x7x365 and watch your keywords move up and down while taking down notes and consorting with the people over at Google. Not even my stock broker does that.

However, I’m still not knocking it. PPC Management is a great move for companies with large keyword lists, enormous product databases and/or big spending whether they outsource it or not. And I do understand that companies would want to outsource a job to a professional rather than spend money on hiring someone full time or hand it off to someone in the company who doesn’t fully understand it. Actually, remember that point because I’m coming back to it.

Now let’s take a look at the other side. Of the same advertisers surveyed, a whopping 4.4% outsourced their SEO to a professional SEO firm. Allow me to reiterate that in case you missed the decimal point: Only 4 companies out of 100 who spent money on Search Engine Marketing in 2004 actually hired a professional SEO firm to handle their SEO.

For those that don’t know, Organic SEO is made up of hundreds of essential elements and modifications that are required both on-site and off in order to make your website a “relevant authority" for the keywords you wish to rank for. SEO requires knowledge in programming, marketing, design, development, conversion tracking, and copyrighting. It requires constant attention to search engine changes, industry information, off-site linking; and it usually takes anywhere between 3-6 months to complete the majority of the work.

So to my aforementioned point regarding outsourcing: Why would 76% of companies spend money to hire a professional firm for their PPC, while only 4% did the same for SEO?? Most of you are probably thinking “that’s because much more companies utilize PPC than SEO”. That would make sense wouldn’t it? It would if it were true.

But according to the same study, 9 out of 10 companies said they were engaged in SEO while only 3 quarters of them said they were implementing Paid Search. Yes, more companies said they were utilizing SEO than PPC. Is anyone else seeing a disconnect here? If 90% of all companies surveyed said they were engaged in SEO, but only 12% of them were spending money on it (4% to outsource to a professional); then how are the other 88% of them getting their websites optimized??

Are their CEOs taking courses, rolling up their sleeves and digging through their website’s source code on the weekends? Are they having UCLA interns come in after school earning 3 credits towards their Poly-Sci major? Maybe they are having their little cousin Bobby from Jersey who took a web design course in ’98 hack away at their SEO? Anyone else have ideas?

My opinion is that when you ask companies “are you engaging in SEO”, the immediate answer is “of course”. While in the background, their Marketing Director who read something about SEO in last month’s Business 2.0 has just tossed the article on his webmaster’s desk who knows absolutely nothing about SEO and is now furiously cramming information from SEO blogs and forums like he’s got a pop quiz the next day because he doesn’t want to look like he doesn’t know what he’s doing. After all, according to the boss he is the webmaster. Either that or these companies truly believe that stuffing a few keywords in their META tags equals a successful SEO effort.

There is no question that SEO requires more attention and expertise than PPC Management. In fact, SEO requires the exact same knowledge as PPC Management in regards to keyword research and company consultation except that the SEO keyword focus makes up only about 10% of the entire project. The other 90% goes towards website rewrites, additional page building, tag implementation, content evaluation, content-to-code reordering, copyrighting, internal link optimization, external link building, engine/directory submissions, testing, reporting, and maintenance. Does that sound like a job for automated software to you? Does that even sound like a job for your webmaster?

So what is it about SEO that most companies think they either “have covered” or think they can tackle it in-house by handing off to someone in their company who isn’t qualified to do it alone?

I like to believe that most companies don’t yet understand the true value of SEO. Maybe they don’t know that statistically 61% of the clicks on all major engines occur on the Organic listings (iProspect 2004) . Maybe they aren’t aware that increases in Organic traffic can actually alleviate the time and money spent on PPC Management, or that the cost of outsourcing an SEO firm is usually cheaper and more effective long-term than hiring a full-time staffed employee. Maybe they just don’t know how intricate and involving the SEO process really is? But most importantly, they probably aren’t fully aware that implementing amateur, ineffective SEO can result in having their websites banned from ranking in the engines permanently.

Anyone can manage your keyword programs with the right amount of training and software. And who better than somebody in your company who knows your products, services and marketplace best? In fact, if you are going to choose just one to keep in-house, why not your PPC Management?

If it were me, I would tell my own brother to hire a professional SEO firm first to see how much free traffic and solid conversions that gets him. Then I would tell him to implement Paid Ads to fill in the gaps (or the time), and then I would tell him to hire a PPC Management firm if he feel like he can’t handle it in-house. But then again, my brother works in Hotel/Restaurant Management where keywords usually only appear on menus.


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