EVALUATING SEM AGENCIES:

INTERNET RETAILER TOP 500 AND FORRESTER WAVE REPORT PROVIDE DIFFERENT APPROACHES FOR COMPANIES

Find the Source that Meets Your Needs

What is the best way to evaluate an SEM agency? PM Digital believes that, for retailers, the key criteria when looking for an SEM Agency are:

  • The ability to handle large, complex search campaigns
  • The track record for delivering qualified, relevant traffic to client websites across multiple industry verticals
  • Relevant industry knowledge
  • Experienced strategists and account teams

Two widely-used reports take different approaches in compiling their rankings.

The Internet Retailer Top500 Guide® isconsidered the most comprehensive ranking of North America's 500 largest e-retailers, based on annual online sales. The report identifies the service vendors that manage search marketing for each retailer in the report, as well as corporate strategies, merchandising and marketing tactics, social networking and shopping comparison site affiliations, site search features and functions, and mobile commerce applications.

The Forrester Wave, a SEM rank report that is also well respected, uses a different model for its agency rankings, focusing on vendors who primarily serve enterprise-level ($1B+) clients.  These enterprise-level clients comprise just 5.2% of the Top 500 Internet Retailers, and have a lower percentage of search spend than the average retailer in the Internet Retailer Top 500. The other 94.8% of the top 500 Internet retailers do not meet the qualification of enterprise-level, and, therefore, they are not a key component of the Forrester Wave rankings. Also, the vast majority of retail marketers have needs very different from those of companies over $1B.

Forrester is very clear that their report is intended for large clients.  As the 2009 Forrester Wave report states, “We looked for firms dedicated to serving the same customers Forrester does: businesses with more than $1 billion in revenues. Companies that have a high concentration of small or medium-sized marketers... did not qualify.”

As such, the 2009 Forrester Wave report evaluated only those SEM vendors whose clientele consisted of at least 40% enterprise-level clients—only seven agencies met these criteria. Six of those seven consisted of 59% or more enterprise clients. And many companies generating more than $1B in revenues invest very little in search campaigns relative to their sales primarily because their brochure websites are not a meaningful destination for consumers.  Compared to online retailers who rely on their websites for e-commerce, the traffic numbers to the website are vastly different for e-commerce retailers versus marketers at the enterprise level. .

While the Forrester Wave report may be an appropriate tool for $1B+ companies to evaluate SEM agencies, retailers would be better served by referencing a ranking system that evaluates a broader spectrum of retailers and the SEM agencies that service them. In short, the IR Top 500 Guide offers information far more relevant than the Forrester Wave report for retailers looking to engage an SEM.

Comparing the Paid Clicks of top 10 Enterprise-level corporations to those of the Top 10 non-Enterprise-level clients from the Internet Retailer Top500 sheds light on the diversity of SEM needs among different types of organizations with different goals:

Enterprise-level firms looking for SEM vendors often focus on the roster of other enterprise clients that the agency represents.  Even that is not a reliable factor in evaluating potential performance.  Regardless of which ranking system retailers look at, the most appropriate criteria they should consider when choosing a search agency are performance and capacity.  They should ask themselves these questions:

  • Will the agency meet and exceed their performance expectations for near-term and long-term growth?
  • Does that agency have the capacity to grow with their business and develop the tools they will need to reach their goals and perform at an exceptional level?
  • Does that agency have relevant e-commerce expertise?

In addition, a retailer that is considering hiring an SEM firm needs to know how the agency will manage its search campaign as well as evaluate its overall performance. To do so, the retailer should consider the following qualities:

  • Talent
  • Expertise
  • Technology
  • Client Result/Performance

For retailers, these criteria will tell the most compelling story of an SEM agency’s capabilities.