Nov 292010

RFPs and Dating

At least once a week Dear Abby gets a letter like this:

Dear Abby,

I just broke up with a guy who seemed great at first but a few months later he barely paid any attention to me and finally I caught him cheating. He was handsome and a smooth talker, but ended up being a rat. This is the fourth guy who's done this to me in the last two years. Are there no good men out there?

-- Brokenhearted in Texas

Abby's response is generally along the lines of:

Dear Brokenhearted,

If you want to meet a different type of guy you'll have to look in different places and look for different qualities than you have been. If you've met a bunch of lousy guys in singles bars, stop going to the singles bars, yadda yadda...

We see advertisers make this same mistake when they're picking agencies. They go through an RFP process, pick the agency with the slickest presentation and smoothest salespeople and end up disappointed with the results. Then, they go through the exact same process, using the exact same criteria to pick the next agency. Remarkably, they end up with the same results.

Oftentimes, this happens against the better judgment of the day-to-day marketing managers for the program in question. The day-to-day folks know enough to separate the wheat from the chaff, but the senior management folks who get drawn into the process end up making the decision despite the fact that they know little about the field. And, they're swayed by smoke and mirrors.

Senior management also prefers to "choose IBM". Perhaps because they don't know the space they find comfort in picking the largest, the best known, the Forrester favorites, etc. "Choosing IBM" is safe because they're famously solid. Maybe they're not the perfect fit for every job, perhaps they're not the best choice, but you can be certain that they're very good. But that's a problem in paid search and in online marketing in general; there are no IBMs.

It depends on the team.

I've heard it said of many of the largest firms in paid search: "They do a good job if you get the right team on your account." That is an incredibly revealing remark, when you think about it. Can you imagine that being said of a top accounting firm, or law firm, or engineering firm?

To me it suggests four weaknesses:

  1. They must take an artistic approach to paid search rather than a scientific approach. A sound bid management system will hit the efficiency targets no matter how badly the account manager has done their job. The program will be smaller than it should be -- potentially dramatically smaller -- absent quality account management, but keyword level performance data shouldn't look crazy if the bid management system works. Erratic performance data strongly implies rules-based bidding, position bidding, or hand bidding done poorly.
  2. Their hiring and training processes must be spotty. In any firm there will be some variation in talent and knowledge among account managers, and even great analysts have their own strengths and weaknesses, but the variance shouldn't be huge in a solid agency.
  3. They likely have retention problems. We've heard the lament from many firms that they can't hold on to their analysts for any length of time. It's tough to provide consistently high quality service if you can't keep the seasoned pros; there is a long learning cycle, so employee churn is extremely damaging.
  4. They must not have much oversight in place. How can an account go south for any length of time? Where is the oversight? A great deal of time and thought must go into developing checks and balances to make sure each account represents the firm's best work. Spotty results indicates short comings in quality control practices.

The point is this: the so called "safe choices" don't exist in our industry, not yet at least. As such the agency selection process must be revised. Advertisers must ask the penetrating questions that defy superficial responses, and they must check references thoroughly. Will the contenders give references from former clients? Do the references they give know their stuff? Do they evaluate success the same way your firm does?

Those advertisers who find themselves disappointed with a service agency should think very hard about how they chose their existing firm, and how they can change their process and evaluation criteria to pick a better firm next time around.

Einstein defined insanity as "doing the same thing over and over again and expecting different results."

Advertisers would be wise to adopt the philosophy: "Fooled me once, shame on you. Fooled me twice, shame on me."


14 Responses to "RFPs and Dating"
This is the most important blog post on the topic of SEM vendor decision-making that I've ever read, and one that SEM advertisers who depend on agencies should circulate inside their orgs (including up the chain of command). Great job, George.
Very kind of you to say, Chris. I didn't want the post to come across as: "Hiring RKG is the only rational choice" -- may be true, but that's the subject of another post :-) We've lost out on a number of RFPs in which the advertiser ends up replacing one not very good agency with another firm that is essentially a carbon copy of their previous firm. It's frustrating for us, and ultimately it becomes frustrating to the advertiser as well. There is a better way to choose agencies and when you boil it all down it's about: reputation, the right answers to hard questions, and references who know the space well. Call it the RRR process to replace the RFP process.
Ironshef says:
Words of wisdom for any search marketer seeking agency assistance, especially those in large, complex organizations. Nicely put, George. I'm also tickled that this was published on my birthday.
Many thanks, Bryon, and Happy Birthday!
I agree with your general point - that clients frequently use the wrong criteria to choose their SEM agency - but disagree with this statement: "A sound bid management system will hit the efficiency targets no matter how badly the account manager has done their job." SEM has always been about so much more than just bids - ad text, landing pages, image ads, site exclusion, negative keywords, etc. Give me the best bid management system with a terrible landing page versus the worst bid management system with the best landing page and I think you'll probably find the results are a draw! Best technology + best human thinking is what is necessary, and yes, sometimes that thinking needs to be "artistic".
So true George. One of the companies where I serve as SEM consultant was planning to get the services of an agency. One of the seniors asked me of suggestions. Only one agency came to mind. RKG. Hopefully, they'll do it right. Else...
Jun, thanks so much for the kind words and reference!
David, we're in full agreement that the account management is a crucial component of a well run program. We may be arguing semantics, here. My point is that if an account manager writes lousy ad copy that ad will show up farther down the page than it could, reducing traffic. If the landing page choice is lousy, it will hurt conversion rates reducing the perceived value of the traffic and forcing down bids. Again, this hurts the size of the program, not the efficiency. A good bid management system will correctly bid to the measured value of the traffic, even if a bumbling account manager hasn't done her/his job well. When we take over programs previously managed by some of Forrester's past and future #1 picks and find keyword level efficiencies all over the map, huge discrepancies in efficiency by keyword, category, head vs tail, etc; and when we find all the bids to be integer multiples of $0.25, we know that there is no intelligent, algorithmic process for setting bids in place. You're absolutely right that you must have a sharp, knowledgeable, skilled analyst on top of the machine to maximize performance; it's a point I've made over and over again. But when there are tell-tail signs of weakness in bid management we know that the agency's problem isn't simply poor hiring, training, and oversight, they also don't have the technology to perform at the highest levels. That weakness will hamper their strongest account managers as well.
I think we mainly agree George. Ultimately I think the "man versus machine" debate is still very much alive in PPC. Personally, if I had to choose between the world's greatest technology and the world's greatest SEM expert to manage my account, I would still go with the expert, as I think that man can succeed with the machine, but the machine can't succeed without the man.
Thanks for your thoughts, David. I wrote a post a year or two ago on the topic of bid management automation in which I argued: it's not the automation but the algorithm that is most critical. I closed with something to the effect of: I'd much rather have a person set bids smartly once a week, than have an automated tool with no robust algorithm set bids stupidly many times a day. I'm with you, understanding language and the controls available are probably more important than anything.
Ben Ross says:
You make a great point about vendor selection, and we have seen that the same problem exists for everyday consumers finding the right service provider to meet their needs – like plumbers (not just when selecting SEM agencies). To help consumers make safer choices, developed a RFP platform that takes a scientific approach to match consumers’ distinct needs with the service providers who can service those needs - we have crafted the right set of ‘penetrating questions’ to understand the most important attributes for the consumer's decision making process and match those with the vendor attributes We can check whether the service providers rate highly across those attributes using the user reviews about businesses (like yelp) and our closed loop feedback system from previous customers using that service provider to get a clear picture of the strengths and weaknesses of each service provider from actual users. We are helping buyers to find the right vendor for their needs - and have found that it is exactly like dating!


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