Lee Odden

SIS Session: Will Big Agencies Ever “Get” Search?

Gord Hotchkiss Mike Margolin

9:00am: Keynote address – FaceOff: Will Agencies Ever “Get” Search? with:
Gord Hotchkiss, CEO & President, Enquiro
Mike Margolin, VP, Interactive Marketing Director, RPA

To present his point about whether agencies “get” search or not, Gord started things out by telling a story. He brings up John from MediaPost to be a human map of Ontario, points out some factual information about Ontario.

Gord asks the audience, “Based on that, would you want to visit?”  Not really. To find out more about Ontario, what would you do? Search.

Using broad topics and search phrases, what sorts of sites would you expect to find? Official Tourism board. Unfortunately, that site isn’t going to get found. What the OTB bid via paid search was all long tail phrases and only from April – July. Doing so misses out on all the investigative search and off season search from people planning vacations.

Gord says that for some reason, when they were at the agency table divvying up media buys, they “did” search, but they didn’t “get” search.

Now Gord moves onto another story: The electrification of North America.

It didn’t take a rocket scientist to see the advantage of electricity over steam. Even with the obvious advantage, it took 50 years for America to adopt electricity. It wasn’t the big companies, it was the small or new companies that adopted electricity more quickly. Why? The big companies had invested too much into steam.

Many of those big companies failed and new companies succeeded because of over confidence in their size and subsequently, their failure to adapt. The large agencies that are “invested” in traditional media will “do” search, but they won’t “get” search. They don’t have the incentive.

Four reasons there are cultural mismatches withing big agencies:

6.5% of budgets are going to online. 2-3% of that to search. TV gets about 42%.

  • With those numbers, there’s no incentive to “get” search because the budgets from clients are going elsewhere.
  • Agencies see search as best categorized as part of direct response, which they don’t do.
  • Search isn’t big, it’s small. Doesn’t fit with agency ways of doing things.
  • The job of the agency is to persuade consumers to buy things, even if they weren’t thinking of buying. Search is not about persuasion, it’s about multiple choice based on user intent. You can’t persuade in search, you can capture intention and offer options. It doesn’t fit with big agency DNA.

Mike Margolin

For the counterpoint, it’s Mike Margolin who begins with a story about the difference in how he and his wife remembered why she “chose” him. He thought it was because he was cooler than the other guys she was dating. She said it was because he had more money to do things with her. This is the analogy for his position that two people can see the same event differently.

Mike establishes that he works for a huge agency and does a wide variety of advertising and marketing including search marketing. They have PHD’s that conduct research on consumer behavior and take a very analytical approach to finding out what works and what doesn’t.

He brings up the post Gord made, “Will Big Agencies Ever Get Search?” and how it got him a bit excited.

The agency job is to find out what channel is the best match for reaching client goals. The really good agencies don’t care whether that’s TV or search. Mike says that some agencies are pissed off at missing the search marketing trend and aren’t willing to give budget to search marketing. They will continue to lose money for as long as they don’t get it.

There are so many companies frustrated over their current agencies not knowing what’s going on in the consumer marketplace, there are increasing numbers of agency reviews. At least in Mike’s recent agency experience.

Search is one of the few media channels where you can spend and spend and then cut it the next day. With most media, there’s an upfront media spend. For those reason, agencies can’t look at search as the first dollars in.

Fixed budgets are money you’re putting into channels that “have to” be invested in like TV or print. Flexed budgets include performance based marketing like search.

Regarding using search as the first place to invest in for building brand awareness, “You can’t put the search cart before the awareness horse.”

Mike gives an example of a major advertising push that resulted in a 1000% increase in search volume. Increased quality score and lowered CPC costs allowing them to compete on broad phrases without huge CPC costs compared to what they would pay if they started bidding on those terms without creating awareness through advertising first.

Mike restates that agencies need to be or are media agnostic. Not everyone needs to engage a full service agency. Agencies don’t need to manage the search campaigns, they can bring in outside search specialists to execute. Mike’s full service agency does not choose to do that though, they handle all search inside.

Mike definitely feels there’s a place for search firms in the future. Also says that in his conversations with the search engines, that there are numerous big agencies that are doing more interesting things with search than the search agencies are.

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Lee Odden About Lee Odden

@LeeOdden is the CEO of TopRank Marketing and editor of Online Marketing Blog. Cited for his expertise by The Economist, Forbes and the Wall Street Journal, he's the author of the book Optimize and presents internationally on integrated content, search, social media and influencer marketing. When not at conferences, consulting, or working with his talented team, he's likely on a beach somewhere doing absolutely nothing.

Comments

  1. Mario Bonilla says:

    Great post. I hear what Gord is saying everyday. Young and older agency PR reps with no real clue about the clients key words and why they should be in the content and just asking for our media list.

  2. I don’t understand either of the comments above? Mike works for and advertising agency, not a PR firm. His argument was that search is part of the marketing puzzle and ad agencies that are doing it right are already using search deeply. His POV is a counterpoint to Gord who says that all marketing should start with search and then expand IF you can afford other media. There is no one solution for every marketing challenge. Mike claims, and I agree, that a good agency (like his) uses the right media mix for each assignment. There is no mix that works for everything.

  3. Pete, Mario works for a news wire service, which serves public relations firms. I can see why his comment would not make sense if that knowledge was not known. The other comment was spam.

    I agree that the marketing mix is unique for each situation. I also think that working for a huge agency, Mike’s POV is very much focused on those companies with huge budgets.

  4. Mike Margolin says:

    Thanks for posting the summary, Lee. Altogether a good job. To clarify, the point of my opening was to explain that perspective often shapes our understanding. Gord’s perspective – and apparently Mario’s and many people on the search firm side – is that advertising agencies just don’t get it. But the agencies that they’re talking about don’t have their clients’ search business (or much of their business) for a reason. If you talk to the execs at the search engines, they’ll tell you that there’s absolutely a core of full-service agencies that understand search, manage it as well as any search-only firm out there and, importantly for many large advertisers, integrate it well with other channels from a timing, strategy and creative standpoint. Agencies like Goodby, who’s done fantastically creative search work, Carat, who’s had a great search practice for 5+ years and has 50 dedicated search associates and RPA (great business results and numerous industry awards) are examples.

  5. Hey Mike, first thank you for stopping by and also for the clarification. I should be better at live blogging by now, but I’m not. 🙂

    One angle on the search perspective is that those agencies are often tasked by the 90% of the companies in business that agencies like PRA doesn’t serve with productive and profitable search marketing services where traditional advertising is not an option.

    When your budget is in the millions it makes sense to create awareness with advertising and then run six figure monthly PPC campaigns and say you saved money. What about companies in the $10k/mo range? It’s a different story.

  6. Mike Margolin says:

    I absolutely agree that most medium-sized businesses aren’t a fit with large agencies. And for many SMBs (and some online-focused businesses), you can make an argument for them being able to build their business without even touching many other media channels. Even a larger search-only firm can support the business of many different sizes of business pretty well. My comments this morning (and in my response to Gord’s original post) weren’t meant to suggest that agencies such as ours are the answer for every company.

    But for the many large, “Fortune 500” companies that operate in a different territory than these SMBs, I do believe that farming out search to a specialist agency without strategic coordination with media planning and creative strategy is a big missed opportunity. And it’s not realistic to expect that the full-service agencies that didn’t lost that search business will gladly give away budgets to a search firm – they’re going to fight to keep as much billings as they can to support their own P&L (just as the search firm is).

    There’s certainly a long-term place for search firms operating in a few different models, including the business situation that you mention. But the large companies who fail to build intelligent, cross-channel marketing strategies will increasingly hold their agencies accountable for falling behind. That, among other reasons (including an influx of really smart, innovative agency leaders who commmunicate exceedingly well across the agency organization, e.g. Hashem Bajwa) will be why big agencies – particularly the ones who are structured in a media-agnostic way – will increasingly value and “get” search.

  7. I for one am not looking for “Big Agencies” to into the picture.