Ad/Search Agency Convergence

This article by Hollis originally appeared in ClickZ on September 27, 2005.

When is an online ad agency not an SEM agency?

I’ve been asking myself this increasingly lately. Remember early 2000’s buzzword, “convergence”? With the latest announcements and analyst predictions, one has to wonder about the convergence of online advertising and SEM.

We’ve got Google experimenting with selling print ad space. We’ve got a JupiterResearch forecast that paid search is expected to outpace display advertising by 2010. We’ve got Yahoo! Search Marketing hiring a former interactive ad agency top gun to help “advertisers to plan and implement search marketing into their overall marketing mix.” And we have MSN transitioning its search ad sales from flat contract, CPC-based Search Featured Sites (SFS) ad buys to a keyword bidding model similar to Google AdWords and Yahoo! Search Marketing’s Sponsored Search.

It makes one wonder. If an online ad agency isn’t also a search agency nowadays, how easy will it be to satisfy client needs?

Is this kind of convergence possible? With all the support and effort offered to agencies by the top search players, is convergence even necessary? Pure-play SEM agencies don’t want you to think so. They’ll throw out intimidating lingo, such as “feeds,” “APIs,” bid maintenance,” and “paid inclusion,” and talk about the daunting task of managing thousands of keywords.

Is it all smoke and mirrors?

Sure, keyword bidding is a lot different and a lot more complicated than traditional impression-based online ad buying. But isn’t online ad buying more complicated than offline ad buying? I’m not knocking pure-play SEM agencies. They certainly have their areas of expertise, and many bring value to the table. But online ad agencies must be SEM experts as well.

Consider those when the online ad agency must become an SEM agency, if it isn’t already. Take MSN’s transition to its new adCenter, which I recently previewed. AdCenter will be launched with the MSN Paid Search solution, its keyword bidding system, on or about October 18, 2005.

MSN Paid Search offers several targeting advancements over its competitors: by age, gender, time of day, day of week, and geographic by DMA. Targeting data can be secured presearch (who’s querying) and post-search (who responded to your search ad). Incremental targeting gives you an automatic bid bump on specific target audiences. In addition to the expected campaign planning tools such as keyword selection and cost estimator, the Site Analyzer tool can scrape your site for additional keyword suggestions and the Audience Profiler shows expected audience profile for a set of keywords.

With this transition, MSN will no longer offer only three search ad spots, as it previously did with SFS. MSN Paid Search will allow as many advertisers to bid as they want, as with Google and Yahoo! Because MSN has a contractual syndication arrangement through July 2006 with Yahoo! Search Marketing for MSN to display Yahoo!’s paid search ads, MSN can’t completely eliminate its competitors’ ads in favor of its own. Instead, MSN will phase out Yahoo’s ads over time.

When adCenter debuts, MSN will serve its own keyword ads 25 percent of the time; the rest will be Yahoo!’s. During the transition, that’s actually better news for Yahoo! Search Marketing and its advertisers. Yahoo! ads will be in MSN’s top premium placements more often. MSN search ad revenue will probably take an early hit. I’m certain MSN is banking on the stunning financial success of the Google/Yahoo! model to make up the difference.

Customer service is where MSN intends to surpass Google and Yahoo! The MSN recruiting machine is in full force, bulking up staff. There will be several hierarchies in account service, from the account executive to the account analyst, whose role is to help analyze campaign effectiveness, to account specialists with different vertical or regional areas of expertise. From my personal experience, if MSN exceeds its customer satisfaction goal, it will be ahead of the game.

And if any doubt remains if the search agency should also be the ad agency, MSN will be more than happy to pitch you on some additional MSN network ad buys to consider.

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