...year-over-year growth in terms of total client accounts for 104 surveyed firms is slowing considerably. The number of clients who are willing to pay for top-of-the-line services is still increasing, but smaller clients are not increasing.The accompanying chart shows a 20% increase in client growth for "top of the line pricing" SEO/SEM firms, while "economy & mid-level pricing" firms actually saw a 1% growth decrease.
We suspect smaller clients may not be educated enough to realize SEO exists or that it's as important (if not more so) than PPC ads for their sites. The SEO industry is not investing in educational efforts the way the Googles of the world are.
I'd like to know how many firms MarketingSherpa researched in order to come up with the figures in their charts--I'm not sure if I overlooked the excerpt, but I didn't see it reported in the article. Obviously, if they took a small sampling, the numbers do not accurately represent the industry as a whole.
SEOmoz has had a steady increase in clientele. What about you guys? Have you noticed a decrease or a stagnancy of the number of clients your firm has? If so, to what do you attribute the slow growth? Lack of awareness that SEM exists? Company ignorance of the fact that they actually need more visibility online? And how come there hasn't been a Gremlins 3?
It would be nice to see more breadth in the report, but some of the observations touched a nerve. The observation about search no longer being a cottage industry is something I think all of the forward-thinking small shops had on their minds.
For every non-search agency that builds a serious search department, we (the small specialist shops) lose access to a slew of potential clients. These clients are already signed with their agency to do web design, print, TV, whatever. And now they find them to be a credible source of search knowledge (yes - some of them actually are.) So these clients disappear from our radar screen.
As time goes on, I think that the expectations of incoming clients will slowly change as a result of this.
Anyone shopping for SEO in 2005 was aware that, for the most part, the market consisted of mostly small firms, and that these firms often had expertise rivaling the big-name, big-staff firms.
If another newbie enters the market in 2008, I think their initial impression will be very different.
Let's assume they don't automatically turn to a pre-existing agency relationship: they will look around and see a much more even mix of companies. They may not look upon small/solo SEO's as a source of expertise. Their comfort level with "established" firms will cause them to shop there first. After all, "if they got big, they must be good."
As search truly hits the mainstream, I think this logic will guide buying decisions - just as it does with any other service.
Per your question about the study that gave us this data -- 104 SEO firms and 63 PPC firms answered highly detailed profiles. In addition, more than 3,000 client-side marketers also gave us additional data, which we were able to cross-reference to a great deal against the agency-reported data. Data was collected via Internet survey (by invitation only) and telephone in the months of July and August 2006. On the agency side, this was our fifth annual study, on the client-side this was our 3rd annual study. Your column did confuse two different items -- we examined SEO-specialists (25% or more revenue from SEO) separately from PPC specialists (25% or more revs from paid search ads) and the data for each sector was *different* to a degree. On the other hand, the client-side data was strikingly similar for both practices -- more than 75% of potential clients (marketers spending on search now) said they did *not* outsource, and that number is steady from 2005. That's the sign of an industry with a potential *future* hard ceiling to growth. In SEO it's already being felt - growth slowed from more than 100% per year in revs to just over 6% in revs growth in the past year. That stinks.
P.S. One more note -- we only require three clients to be listed to be allowed in, along with having been in business for at least a year. That's not biased, that's weeding out the wanna-bes.
I don't think I confused anything. I was aware that you studied the two separately and displayed separate data; I just quoted SEO numbers in the post.
Ah - it's the terminology that's the confusion then. Please do correct me if I'm wrong... I've assumed for a few years now that: 1. SEO - search engine optimization
2.Paid search ads - aka PPC although PPC can be used for non-search online ads as well, which muddies the waters.
3. SEM - umbrella term incorporating *both* SEO and paid search ads.
I'ce always been careful to try to stick to each in the right context, because the tactics and the revenues associated with each can be so very very different. When you said "SEM" I assumed you meant the umbrella term and not just SEO... do others use SEM in this way?
Yeah - some folks do, but you're right Anne. SEM is the umbrella term encompassing paid and SEO search marketing.
I have to disagree with a couple of points.
Not at all.
That's the sign of market segmentation, which is why almost anyone watching the industry cannot have possibly failed to note the huge growth in training-based offerings - a product for those who won't outsource.
Examples from just the past couple of months include Andy Beal, Jim Boykin, and my own recently launched training programme. Many of us have been providing consultancy to in-house SEO departments for some years.
If your analysis managed to miss that, then it really may be time to reexamine the justification of some years of criticisms that your data is skewed by undue (perhaps unintentional) bias in your survey demographic.
Yet it was noted In recognition of how tough it is for client-side marketers to hire search marketers, a full 76% of profiled SEO firms reported to MarketingSherpa that they offer training services for marketers' in-house staff. Very smart move we say. so how was the full connection missed here? Did you simply not realise that training is often ongoing? That clients require updates? Or was a neat warning soundbite too desirable to care if it actually made sense?
Of course, from what I saw in the survey, it wasn't the data I was most disappointed with - it was the failings of analysis. I've rarely seen a study that missed the obvious so badly: client accounts have risen by roughly 50% Throughout the year we've heard anecdotal stories of the top-priced PPC agencies jettisoning smaller clients in favor of larger accounts So you do notice that firms are dropping lots of small accounts to focus on fewer large accounts, yet are unable to then spot the reason why growth in number of clients is slowing... hmm...
Fewer clients shows most in those who specialise in small business. That is the one worrying trend for new firms hoping to tap that market (as most new firms predictably do). After all, more and more of the larger SEO firms are cleaning out the smaller, less profitable clients to better focus on growing the larger accounts. Successfully, as your survey noted.
Yet the smaller, newer agencies are apparently not picking up those discarded smaller clients. That was the one part that needed further investigation and analysis.
If the volume of companies that won't outsource SEO hasn't grown or shrunk to any meaningful degree, and those smaller accounts are not growing in the smaller SEO firm action, then where have all the smaller accounts jetisoned by the better established SEO companies gone to?
The only answer one can see in the data presented is that some of those smaller accounts have gotten their act together and become the new larger accounts of other companies (the 20% growth of clients in the higher brackets). It seems the only possibility since they have not given up (no significant growth in non-outsource segment) and have not moved to smaller companies (1% decline in clients in this bracket).
Thanks, Ammon. Without you challenging assumptions, I think there might be people who simply take the stats they see at face value.
I'd like to know how many firms MarketingSherpa researched
104 surveyed firms as you quoted :)
Duh...I'm an idiot.
My thoughts are that because as the larger companies realize the need and importance of SEO/SEM and increase overall spend, the majority of larger agencies weed out the smaller clients in order to better serve their high profile, higher margin clients. I dropped all of the smaller bread and butter clients to solely focus on large enterprise level clients that I could make the most impact with and get better results for by focusing on hundreds of thousands or millions of pages versus a client with say 50 to 100 pages...definately keeps me busy. In addition, I specifically avoid listing my consulting firm in the Marketing Sherpa guide for several reasons including:
(a) competition (b) I dont want or need any new clients so why advertise? (c) I literally cannot keep up with the word of mouth referrals I'm already getting and turn down 90% (d) many of my Fortune 500 or major ecommerce clients dont want their competitors to know who they've hired for SEO (e) I know there are arguments against this but I can't grow as an agency. I've tried, but companies mainly hire me for my 'network' and contact list, as well as business development, strategic alliances and overall monetization strategy on building businesses (including access to venture capital) - not just SEO skills. How do I train for that?
So no growth in staffing over at the Boost camp. I just keep raising my rates ;)
The Marketing Sherpa guide wouldn't let us in because I wouldn't agree to publicly reveal 5 clients. Just from chatting with folks around the industry, those of us with a high recognition level through events, blogs, press, etc. are not being listed.
Also - I think (e) is the most important point in Joe's response... How the hell do you train people to make contacts?
Sound pretty biased to me.
It is sort of like the wholesale auto industry. It is next to impossible to walk into any large franchised dealership and ask a used car manager if he has any cars he wants to wholesale or buy to increase his inventory. If he doesn't already know you, the answer will be no. Now when the Rand of the ws market walks in the door (lets call him CarRand), the manager will buy anything he has for sale because he knows CarRand.
So how does someone new get their foot in the door and how does CarRand train his new people to make the same contacts as him? Easy. Number one on the list is to start having the new person make the calls and go on the visits that CarRand would normally make. CarRand would of course let the person being visited know who was coming and he might even join the trainee on a few visits or be in the background on some conference calls. You also have to teach your new people to name drop. If the same trainee walked into a dealership and said, I work with CarRand, blah blah blah, he would most certainly be able to get his foot in the door.
Contacts are all about relationships. A relationship has to be based on something, so why not pick the first thing the contact and your trainee have in common, YOU.
That's exactly what I wanted to know. It shouldn't be an accurate representation, then, if the guide won't acknowledge the firms that they should.
Great points, Joe. That's a good explanation for the slow growth reported.