Outsourcing Paid Search vs. Keeping it In-House
Digital marketing is constantly evolving to allow for new capabilities. While big corporations rely on massive budgets and highly qualified teams to maintain their market dominance, smaller businesses can compete effectively by applying laser-focused efforts. Paid search, otherwise known as pay-per-click advertising, should be a key component of any small or medium enterprise's marketing strategy.
Advertising on search engines like Google allows a business to put its products and services in front of prospective customers. With almost four billion searches being conducted every day and with over 35 percent of all product searches starting on Google, a business cannot afford to dismiss advertising on the tech giant's platform. Lets take a quick dive into the benefits of paid search advertising.
Pay-per-click ads deliver immediate results
When starting a pay-per-click campaign, the ads will begin to run almost immediately. This offers up a clear advantage over organic (SEO) methods of generating sales. Search engine optimization, which in a perfect world should be done in parallel to running ads, can take several months to yield significant results.
Generating qualified leads
A correctly designed pay-per-click campaign can target a very specific audience. SEM advertising is a competitive auction, so this means that each time an ad is eligible to appear for a search, it goes through the ad auction process. The auction determines whether the ad shows, and in which ad position it will show on the page. Ads are served to users that are actively looking for specific products or services. In most cases this leads to higher conversion rates as leads are qualified based on their search queries.
Pay-per-click advertising is highly measurable
Advertisers can gather metrics and compare them against cost data. Analytics such as the number of impressions, average ad position, click-through rate and quality score provide a clear picture as to a campaign's performance.
Scaling according to a company's budget
Pay-per-click is very budget-friendly as it allows for scaling according to a business's funding capability. Advertisers can set daily budgets to as much, or as little as they like. As the name suggests, the platform only charges for ads that users click on.
Strategy and Tactics
A business can follow one of three paths to implementing an advertising strategy. Depending on the size of the ad budget and the level of control the company wants to maintain over its campaigns, one of the following can be implemented.
In-House
This is where an internal specialist or team runs the ad accounts. Companies with large pay-per-click budgets will achieve the greatest benefits from this option. An advertising agency can charge up to 20 percent of the budgeted amount as well as a management fee.
For organizations that spend six-figure amounts monthly on pay-per-click ads, the fees may not justify delegating this task to an outside entity.
The drawback of keeping pay-per-click campaigns within the company's marketing department is the lack of access to extra know-how. Agencies run campaigns for many different clients in different niches. As a result, they have access to large data sets against which they can benchmark processes and methods.
Outsourcing
Outsourcing campaigns is best reserved for small & medium sized businesses that cannot afford to hire a specialized team. Smaller ad budgets mean that fees paid to an external consultant will be reasonable in size. Ad spend can be scaled to fit the company's needs and goals.
An important point when outsourcing pay-per-click campaigns is the ownership of the resulting data. Some ad agencies do not allow their clients full access to this data and will often run with any accounts that they may have created on termination of a contract. Sadly this has been seen by us many times, by national agencies who should operate more ethically.
The best arrangement is for the hiring company to own and have access to the campaigns that the consultant will work on. This way, any data and know-how remain with the client.
Hybrid Approach
Small and medium businesses that wish to scale up their pay-per-click presence on search engines can take an in-between approach. This will allow a smaller enterprise to grow according to their abilities without placing unnecessary stress on their budgets. By following this hybrid approach, a business avoids incurring large agency fees or making unnecessary hiring too soon.
The hybrid approach hinges on the ability to outsources some of the account management tasks while building the necessary environment within the company to facilitate the eventual transition to an internal implementation.
Technology Outsourcing
Some ad tech is the set of applications and tools that facilitate the operation of a business's pay-per-click campaigns. The principal purpose of bid management tools is that they provide automation of bidding, the day-to-day task of bid management. Bid management software is run by bidding software / algorithms, and the software utilizes the data it is provided, in order to attempt to set the optimal maximum CPC bid.
For example, without complementary tools, sifting through thousands of keywords in order to optimize bids and eliminate ineffective terms can take hours. Software tools can reduce the effort necessary for completing essential tasks while offering the capability to export precious insights in report format.
Likewise, allowing the algorithms to run without intervention and oversight can often lead to poor campaign outcomes. The tool might know a keyword will convert regularly, but it might not know the bottom-line impact of certain terms. During my time at Priceline we regularly experimented with Googles bidding algorithms. We continue to see mixed results, and do not recommend over-reliance on bidding automation.
Outsourcing of this type of technology helps avoid paying the large sums associated with developing proprietary tools and gives a business the flexibility to add more options in the future without having to hire software developers or pay exorbitant programming costs.
Insource or Outsource
The decision comes down to an exercise of balancing all relevant factors. A business's budget and the size of the audience it intends to reach will determine the degree to which it keeps its marketing budget within company walls
Insourcing requires the additional overhead of hiring staff, payroll taxes, benefits and associated employer contributions. The ramp time will be longer with insourcing but is more of an investment in the company.
Outsourcing would grant immediate access to an agency full of talent for much less than it would cost to scale and train an internal hire. This is the faster, cheaper, and easier approach in the short term.
The financial implications of choosing between insourcing and outsourcing must be weighed against the benefits that each option offers. Companies on the cusp of insourcing need to weigh the short and long term costs of doing so.