“I earn RM300,000 a year just with SEM!”
by Larry Lim
I’M BACK again with a another piece on Search Engine Marketing (SEM), and after reading Ham’s interesting take on “How Media Agencies Are Making Money” and the even better response from debon’air, I thought I’d write about the bread and butter issue of search. This article will discuss the opportunities available to agencies, the common business models for SEO and campaign management, and the current market situation – again, using Google as illustration.
The Business Case
First, let’s dive straight into the question of whether you can make money providing SEM. Obviously, the answer is a resounding “Yes!” or otherwise, I wouldn’t be doing what I’m doing today. In addition, it’s good money, too and I’m saying this based on regional context, and not using the US$60,000 SEO project rates in the United States.
In Singapore, authorized Google Adwords reseller Activa Media is having a field day with the medical industry, charging flat fees of up to S$200,000 per client per year. Close competitors Purpleclick and Bain & Mercer are aggressively expanding regionally, while US-based Acronym Media is setting up a local team and going after the big MNCs.
I sometimes hear skeptics remark that Adwords was built for the end-user so there’s no place for a campaign manager. Now think about it – if you’re a marketing person working for a big company and hence, have a wide range of responsibilities, would you rather outsource the job or do it yourself? Let us not forget that there’s the advanced knowledge required for campaign optimization so that you can maximize your ROI.
If you still aren’t convinced, let me tell you the story of a multi-national, software house whose Chief Technical Officer was managing their RM6,000-a-month Adwords advertising. After reviewing their campaign, I found that half of their keywords were inactive, they were unwittingly advertising to jobseekers and there was no conversion tracking.
Things are even more technical with SEO, and you’d have to be a cross between a web programmer and a marketer to do the job. Coupled with the “non full-time” nature of the roles, you can logically see why there’s a case for a third party to provide SEO and Google Adwords campaign management.
If you’re pessimistic about our local market, well, I happen to know a local company that has been advertising for an SEO position for the last nine months and is willing to pay a basic salary of above RM10,000 a month. Sadly, they still have not found a suitable candidate yet. Hence, the issue here isn’t whether there is market demand or whether companies are willing to pay but that there are not enough qualified people out there to do the job.
Doing only SEM, I make between RM250k to RM300k in net profit a year. And that’s by being a one-man show, having limited clients and working less than 15 hours a week (I’m in semi-retired mode at 33 years old but that’s a story for another day).
The Business Model
a) Search Engine Optimization
Providing SEO is a fairly straightforward affair once you’ve identified the objectives, e.g. to generate sales leads, create brand awareness, defend online reputation, etc. SEO is results-based and easily measurable so you should be careful in positioning your service. While most consultants sell SEO as improving your current rankings, there are also others who sell it as guaranteed top 5 rankings.
Generally, the work starts with keyword analysis, doing a website audit, providing on-page SEO recommendations and lastly, the all important link-building campaign.
Most SEO consultants also provide a benchmark report prior to work done and a comparison report at the end of the project to illustrate the increase in rankings for the targeted keywords. Sometimes, this is further emphasized by showing the improvement in “non-paid keyword” traffic using the tracking report from Google Analytics.
There is an unwritten rule that a consultant should not work on two clients from the same industry at the same time to avoid any conflicts of interest.
Currently, there is no clear leader in this field, and by that, I mean a full-fledged agency. SEO is being provided by web designers to one-man agencies hiding behind a shared office address – most probably don’t even know what they are doing. As you can imagine, charges vary greatly. Although a profit-sharing model is sometimes used, the most prevalent charging model is a flat-rate consultancy fee. In Singapore, the typical range is from RM9,000 to RM18,000 per project, while you also have new-comers who charge a third of that amount and include money-back guarantees. Some consultants charge a monthly retainer for “maintenance” after the initial SEO work.
To survive in this field and if you want to charge a premium, you should be able to rank well yourself, have an impressive client list and be highly recommended by others. These observations are validated by my own experience. Despite being a freelancer, I have been approached by the bigger companies and have been able to charge up to RM26,000 for a normal SEO project and RM11,000 monthly retainer for online reputation management.
b) Google Adwords Campaign Management
The value of providing Google Adwords campaign management is in optimizing the campaign for maximum ROI and the day-to-day managing so the clients can focus on their core business. Google provides a My Client Center (MCC) platform for this purpose, to enable the campaign manager to conveniently manage multiple clients from one place.
The project starts with the campaign manager registering a new account and creating the campaign on the client’s behalf using the MCC – the client’s account is automatically linked. The client then logs in to enter his/her credit card details for billing by Google. Certain clients may prefer to use your account instead of registering their own, so they can get credit terms on their ad spend from you. In most cases, it’s because the client doesn’t have a corporate credit card and dreads using their personal one.
The first month is used to accrue data for optimizing the campaign by adjusting the keywords, matching and bid prices. After that, the work reduces to largely making sure there are no inactive keywords and generating monthly campaign performance reports – usually in Excel spreadsheet format and summarized from the comprehensive reporting tool that Google provides.
The two common charging models for Google Adwords campaign management are based on either a flat monthly fee or a percentage of the ad spend, which goes up to 30%. Clients will naturally prefer the former because there is a conflict of interest in the second model. Instead of fulfilling their role in helping clients save money, the campaign manager may end up spending more to increase his/her own commission.
I charge my clients a flat monthly rate of between RM1,000 to RM2,500 depending on the complexity of their campaigns.
Google has a program to qualify individuals and companies as campaign managers, which includes having managed a minimum ad spend over a 90-day period and passing the Google Advertising Professional Exam. Once you become a Qualified Individual or a Company, Google creates a page for you on their website to “certify” your status so that you seem more trustworthy.
The turnover rate for campaign management is high because the objective of Adwords advertising is almost always to generate sales leads. If the campaign is not converting enough, the client is very likely to terminate your services.
Nonetheless, providing Google Adwords campaign management is an attractive proposition due to the recurring fees and upfront work. It becomes a volume game if you’re targeting SMEs because they have smaller advertising budgets and hence, expect to pay even less for your services. A friend who owns such an agency managed to own hundreds of clients with just 14 employees – save for the 2 who manage the campaigns, the rest are all sales staff.
Did you know…?
Many companies are adding online advertising to their integrated marketing plans with the growing awareness and as more Malaysians get on the Internet. My guess is that a big chunk of the ad dollars will be spent on SEM because of its clear advantage in terms of relevance, targeting, measurability and ROI. In the United States, SEM accounted for 41% of the US$21 billion online advertising revenue in 2007. Taking this into consideration, together with the fact that companies are more than willing to pay for quality work and the absence of any major player in the market, you should seriously consider including SEM in your portfolio of services if you have not already done so.
Nonetheless, SEM will be somewhat more challenging than traditional advertising because it is results oriented. If you cannot put your client in the top 10 search results or convert enough customers from an Adwords campaign, you are considered to have failed.
So there you go – the opportunities, common business models and existing market situation for SEM – all on two pages. Now get cracking!