Living a Marketing Macro-Trend: We've Walked this Path Before...
By Sage Peterson
January 2004
If you live long enough you get to watch history repeat itself and feel a pang of acquired wisdom while watching. For those of you whose
marketing careers span back to the mid- to-late 80's, the current surge in popularity of search engine marketing is eerily reminiscent of a
marketing "macro-trend" whose origins can be traced to that era.
That trend also melded marketing and technology, had its own "major players" and "ad agency angle," its own profits and pundits, its own
early adopters, its own "in-house" vs. "outsource" debate, its own set of buzzwords and its own alphabet soup of acronyms. That trend?
Database Marketing.
So Who Cares?
So why draw the parallel? Simple - look at database marketing today. You hear the phrase less now than ever, and why? The theory,
strategy, and logic behind what was once cutting edge database marketing is now part of the common horse-sense of how the world does just
plain "marketing" -- both online and off.
Database marketing became part of the DNA of all marketing - it's intrinsic - inseparable. And search engine marketing is fast on its way
of becoming just as fundamental and elemental a part of everyday marketing as database marketing has become.
The Early Adopters
In the mid-80's a few directionally-challenged marketers working for huge insurance and financial service companies got lost on their way
back from the company cafeteria and tripped across the "computer room." These technological dungeons were typically adorned with rows and
rows of "big blue" mainframes stuffed with all sorts of information about their millions of customers.
Light bulbs bloomed above the marketers' heads and quickly they were high-jacking programmers - whose job it was to run payroll and generate
claims/dividends checks - to write programs to identify their best customers and examine what traits these customers had in common. These
were database marketing's pioneers - the insurance and financial service companies with huge technological arsenals, huge marketing war
chests, and millions of customers and transactions on which to test their marketing strategies.
Similarly, as search engine marketing has evolved, who were some of the first companies to experiment with this new marketing paradigm, and
to date who are some of its largest spenders? You got it - huge insurance and financial service companies.
The really good news for search engines, SEM firms, ad agencies, and any other enterprises that have - or will - lay claim to a piece of the
search engine marketing pie is that adoption of SEM as a mainstream marketing channel is happening blazingly fast in comparison to database
marketing. In any number of the verticals - retail and cataloging, for example - SEM is already being used extensively and powerfully by
the companies as small as $10 million in annual sales.
When you recognize that there are approximately 3000 U.S. companies that generate $1 billion or greater in annual revenue (SEM's "pioneers"
and "early adopters,") and approximately 220,000 companies that generate between $10 million and $1 billion, you can appreciate the
potential that exists for this marketing medium as this acceleration toward mainstream marketers continues to take place.
The Agency Parallel
I remember with great clarity the way advertising agencies only tentatively embraced database marketing in its infancy, and recognize the
similar pace at which they now commit resources and expertise to search engine marketing on behalf of their clients. Why? Frankly, because
learning, performing and perfecting either of these disciplines is just plain hard work.
Rules of the industry get written on the fly. New technologies and new areas of marketing specialization develop overnight. All of a
sudden PhDs in statistical analysis and modeling are required - or in linguistics and computer science. There are tools that help keep
track of it all and the most progressive and effective ones are home-grown through trial and error by those on the cutting edge. This isn't
sexy media work like buying Super Bowl ads or buying space in glossy magazines. This isn't cookie-cutter plug and play stuff - this was
marketing utilizing state of the art internet technology on steroids.
During the late 80s a few select agencies like Bronner Slosberg Humphrey took database marketing seriously, and scooped up boatloads of
marquis clients before the marketplace could blink. Today the same trend exists with the 2-3 larger SEM firms and their deep-pocketed
Fortune 500 clients leading the SEM charge.
And just as "direct" divisions of traditional agencies started springing up in the early 90s, and "interactive" divisions were born later in
the decade, agencies are going to have to decide what to do with search engine marketing in the first decade of the new millennium. As SEM
moves to the mainstream it won't be able to be ignored. Will agencies soon start launching "search" divisions? I'd bank on it. The
question is, will they build them internally, buy them through acquisition of SEM firms, or outsource them to SEM partners?
Time will tell, but I expect that within the next 12 months we'll be able to clearly recognize either a "build," "buy" or "outsource" trend
within the industry as most interactive agencies will be forced to decide how to provide these services, or be left behind while someone
else does.
And two other trends will continue: the larger specialized SEM firms will continue to define the cutting edge and will remain at the top of
the search services food chain, and search engine marketing will be move firmly engrained in the DNA of everyday marketing. Trust me on
that. I've walked this path before.
