Advertising Agencies No Longer Relevant for Brand growth.

January 22, 2009 on 2:09 am | In Uncategorized | No Comments

Are Advertising Agencies relevant? Only as a back office.

Why are advertising agencies no longer able to help their clients grow their brands?

First, a little history.

You can read previous posts on this blog to learn about how most large advertising agencies are owned by about 4 or 5 large companies. And, the small ones generally look to their ‘exit strategy’ as selling off to one of these groups.

Being a big company used to really matter in advertising. This was because television and cable advertising, as well as print, was based on negotiated rates. If you spent a very important amount of money, media networks would give negotiated rates.

This allowed Advertising agencies to make money by being able to negotiate a better rate than their client could by themselves, or through a small agency.

So, this created an incentive for large conglomerates to maintain their enormous size. It gave them a strategic edge in terms of buying media at discount prices.

Nowadays, with more media choice than ever, and Tivo eliminating the importance of Cable advertising (just give it a few more years, and the party will REALLY be over.), the gravy train is almost come to a halt.

Well, the old rules may still apply to television advertising (while it lasts), but these rules for sure don’t apply to the world of digital advertising.

Why is digital advertising different? Well, instead of just the broad reach, and the negotiated rates…what really becomes important is the response, or the return on investment.

By being able to segment customers much more effectively based on time of day, or their individual purchasing behavior, or other predictive methods such as geography, demographics, psychographics, or other media consumed, agencies are able to get more results with the same number of eyeballs.

Now, it’s more about getting closer to your target market, and getting the RESPONSE you want, rather than just hoping you can get a negotiated rate for a massive number of untargeted eyeballs.

In this week’s B2B magazine article, “Marketers look to in-house agencies to cut costs”, the trend in in-sourcing agency work is highlighted. This is the first time that the Association of National Advertisers is doing an in-depth study of the trend of in-house agency development.

The process is driven by cutting unnecessary costs, and improving efficiencies.

50% of companies surveyed said they have never had an in-house agency, so there is a lot of room for growth with this trend.

Agencies are no longer a middle-man that ad value.

The new media landscape is dominated by players like Google. One thing that makes google different than old media companies (even digital ones) is that they don’t give discounts or negotiated rates to ANYONE.

This means that, when buying media from Google, there is no strategic reason to use an agency.

The way agencies made money was charging based on the % of the budget. Somewhere around 15% was a standard.

Well, this is totally different when it comes to search.

For search, Agencies these days don’t charge based on budget, they actually charge based on the “butts in the seats”.

So, basically, agencies are functioning more like an outsourced backoffice, rather than a true value-added company with expertise, or some unique selling proposition.

It no longer matters what relationships agencies have, or what ‘clout’ they may have with media networks – None of this matters when buying from Google and Yahoo.

So, they’ve resorted to charging simply based on how many workers are working on the campaign.

This means that agencies no longer have any strategic value.

2009 may be the year that Tivo and DVR drives a stake in the heart of the Agency’s profit margin.

Since ‘clout’ with the networks will disappear once the media purchasing fragments due to Tivo and DVR, Agencies will lose this strategic position as a profit center.

Since they have already been relegating to charging based on ‘butts in seats’,

Advise to clients? Build your own in-house agency for most things, and only outsource to agencies for some processes such as media planning and creative development. Oh yeah, I’d also recommend forcing those ‘butts in seats’ to use screen-capture technology so you get all the butts you pay for.

Any fortune 1000 company should be competent enough to hire someone to operate an Adwords account.

‘Nuff said.

Why SEO Magic is Dead.

January 22, 2009 on 1:51 am | In Uncategorized | No Comments

Long gone are the days where Google would shuffle it’s algorithm and you could beat your competitors by knowing some technical tricks.

“Florida”, or “Big Daddy” updates are a thing of the past. Today’s updates are much more gradual, and don’t effect the results nearly as much.

Today, it’s all about links, and you can’t get them overnight. In fact, new links are discounted to eliminate the manipulation of rankings.

For larger companies and their agencies, the issues with SEO are far more problematic.

First of all, since agencies generally sign contracts for one year (at most), and often even shorter time periods, the agency actually has no actual incentive to provide actual results.

This may not apply to agencies that have SEO as their main area of business, but those are few and far between. Most agencies make their REAL money from SEM, or other digital advertising.

SEO becomes “want fries with that?”

The idea that an agency has no stake in the results prevents there from being any meaningful dialogue in terms of SEO planning.

It doesn’t really matter anyway, since most large companies aren’t poised to execute on an SEO campaign.

Marketing has to want to do it. (Hassle for them. again, the employees aren’t stakeholders either.)

Finance has to let it happen.

Senior-Level management has to give a darn about long-term SEO planning. Most of the time, Senior-Level management are not concerned with these things, especially in consumer brands which don’t generally focus on search for growth.

When was the last time you made a toothpaste purchasing decision from a Google search?

So, what ends up happening?

Marketing companies drum up “Statements of work”, and “Service Level Agreements”, which have no substance at all.

Instead of man-hours, or tangible results, they bill based on “optimizing X number of pages, or X number of keywords”.

For companies that need to target local combinations, this certainly will never work.

For this reason, I generally advise my clients NOT to use an agency. Especially not one that is large and is involved in other areas of business such as digital display ads, and SEM.

Many in the industry have noted similar observations.

“Now, SEO companies are morphing into what I call a “Sales Efficiency Organization”. Or S.E.O for short. They are primary sales companies that are set up with high efficiency to pump out as much SEO service sale churn as possible. Sell SEO to as many customers as possible for the highest amount possible. Instead of devoting resources to growing a link building division, they instead grow a phone or email sales staff capable of selling a screen door to a submarine.”

from Ranksmart

I don’t blame agencies for their hand-waving sales and presentation tactics. I blame the clients who allow this to happen.

All you need to learn about SEO, from a Job Screening Test

January 22, 2009 on 1:36 am | In Uncategorized | No Comments

Looking for an SEO job?

Be prepared to answer questions like this:

Q: What are some techniques you use to build content for clients?

A: Landing pages, site maps, navigational pages

Q: What are some techniques you use to build links?

A: Press Releases, Link Bait

Q: How do you track results to prove success?

A: WebTrends, WebCEO, Proprietar

Q: What sort of changes do you usually have to make when optimizing a site for SEO?

A: Title tags, internal linking, headers, dynamic URL fixes

Q: What are the most important on-page elements for search engine performance and how would they rank it in order of importance? E.G. Is it Title tag first? Description tag? Headers? Text? Can you tell exactly what each of the search engines like specifically?

A: Title Tags

Do you know what a 301 permanent redirect is describe it and how is it used in SEO?

(Answer available to clients and those who comment on my blog.)

What Search-related blogs/forums do you read and enjoy?

(Blog readership is expected of candidates in the SEO field.)

Personally, I read:

ReadWriteWeb, TechCrunch, Mashable, Dion Hinchcliffe