The evolution of SEM

January 29th, 2007

Recent articles by both Gord Hotchkiss and Andrew Goodman both investigated the reasons why Search Engine Marketing firms werent being acquired for large sums. Gord argued that much of this could be attributed to the fact that SEM firms were deemed too tactical and lacked the skills to segment and profile applicable demographics. Andrew Goodman went on to say he agreed with Gord assessment however his analysis of the “current reality” was incorrect.

To a certain degree I have to agree with much of what Andrew Goodman had to say. For example:

True, a big law firm that serves big corporate clients almost never acquires a small firm that has some specialty they’d like to add. And that’s the closest analogy with the notion of, say, the world’s largest ad agency acquiring my very small SEM agency. The law firm just hires new associates or recruits partners with different skill sets. Is that because the small firm is “too tactical”? Or just too narrow/small to have the marketplace leverage to *force* a buyout? If the little guy starts actually taking the big guy’s customers, that’s when the big guy takes notice.

So that leaves us a little closer to the answer: if ad agencies are the likely acquirers in the scenario where the target client is mostly larger enterprises, the only leverage a boutique agency has is either in their client list and growing cachet in their own right, or some expertise that the agency will take too long to develop in-house.”

From my own perspective, Andrews comparison there was spot on. From my own personal experience, traditional advertising organisations have been painfully slow on the uptake in terms of Search Engine Marketing, focussing on the potential challenges it presents rather than any long term benefits it can bring, as part of an integrated campaign. Much of this leads to an “ignorance” of search engine marketing, what it entails, and exactly how it fits in with both offline and direct activity.

Such organisations only start taking notice, once the figures become too difficult to argue against. Over the last year or so the number of organisations entering the online marketing arena has increased substantially, as a result of new startups, web development agencies moving into the search arena and offline agencies starting to take notice. One of the bigger acquisitions in the UK Search marketing arena this year saw Global Media buy BigMouthMedia for around £50 Million. However these acquisitions are few and far between at the current time.

However many of these acquisitons are still taking place between organisations within the Online marketing arena itself, and whilst there are a number of integrated agencies such as i-level and Connectpoint offering a full integrated marketing solution, these still tend to be the exception rather than the norm. Much of this IMO opinion is still down to some pessimism of an integrated approach and much has been said of who is better placed to deal with online marketing, ie is it the integrated agency or the boutique agency.

Much is made of search marketing and its fit in the marketing arena. It should however be considered that in comparison to traditional offline advertising, online (search) marketing is still very much in its infancy (Google only started in the nineties for example), and thus has still a considerable amount of evolving to do. It should also be considered that search IS evolving at break neck speed, with personalised search, online PR, convergance technologies (mobile/voip) and social media all having entered (to a certain degree) the mainstream over the last couple of years.

One thing is for sure, it is only a matter of time….

Entry Filed under: SEO Industry, News and Views, SEO, PR Syndication