Ad Agencies Problem With Search Marketing

October 2, 2009 by

1 Comment

ignore-searchA lot of ad agencies have been resistant to paid search, despite its unquestionable effectiveness when compared to other media. I think there are a number of factors for this:

Commission (or lack of)
Google PPC media charges are non-commission bearing & this would have to be the number one reason most agencies have actively ignored search until now. The view many seemed to have was that every dollar spent on search effectively cost them lost commission they could earn on traditional commission-bearing media. As a result media plans that should have included search didn’t, or at best it was token.

Obviously the advertising world remuneration structure is changing dramatically. Ad agencies are having to adapt & come up with alternative charge models, such as a transparent management fee on top of media charges.

Measurability
Search is highly measurable & some cynics suggest that not all agencies have liked the associated accountability this brings.

Skills Shortage
There’s a shortage of truly skilled search marketing practitioners in NZ, as there is in other markets. Google have done a great job making the AdWords interface relatively easy to use & training agency staff. However running complex search campaigns takes significantly more time & effort than most agencies realise. As a result many struggle to make money from paid search compared to other ‘set & forget’ type media.

Client Ignorance
Until recent times search has been a relatively arcane subject & many clients simply weren’t aware of the benefits of search. This has changed & smart marketing managers are increasingly demanding that media plans from their agencies feature a decent search component.

The good news is that things are gradually changing & increasingly agencies are being compelled to factor search into the media mix. This sea change is clear when you look at the latest IAB figures which show advertisers are shifting spend online & a major part of this is search.

According to IAB, New Zealand television ad revenues were down 13.3% for the first half of 2009 compared to the same period last year. In stark contrast online advertising grew 7%. Online represented 8.3% of all NZ adspend in 2008, and given the current trends, IAB expect it to exceed 10% for the full 2009 year.

iab-Q2-09One of the key drivers in this growth has been paid search. It’s now the biggest online advertising channel & as at Q2 paid search accounts for 36.3% of all online spend (up 26.14% on the same period last year).

The IAB expects growth in paid search to continue and eventually account for about 50% of online spend, as in other more developed markets like Australia & UK.

Love it or loathe it, advertising agencies really can no longer ignore search. As a result many ad agencies have either been trying to develop skills in-house to manage paid search campaigns (not as easy as it sounds), or have decided the better path is to partner with independent specialist agencies like SureFire Search (shameless plug). An example of this is Ogilvy who use SureFire to provide search marketing services to their clients.

1 Comment

  • Received the following comment from Alex Radford of OMG & his point regarding the distinction between ad agencies & media agencies is valid. Thanks, Alex.

    Hey Mark, just reading your post about Ad agencies on the SureFire website. What you are talking about are actually media agencies, not ad agencies. Ad agencies couldn’t care less about PPC as they develop the creative. It is media agencies such as OMD, PHD, Starcom that hold the purse strings when it comes to search. Never call a media agency an ad agency and vice versa!