There are many very good SEM agencies in the market today. Unfortunately, there are also many SEM agencies that are mediocre at best and fraudulent at worst.

As an agency in the “good” category (we hope!), we get to meet the “bad” agencies all too often when savvy clients terminate their relationship with their existing agencies and move their accounts over to PPC Associates. My experiences over the last four years in dealing with these other agencies have taught me how to sniff out a bad SEM agency. Hopefully this post will save you time – and money! Here are 10 major warning signs that you have the wrong SEM agency:

1. The agency insists on owning your AdWords account.
When you set up an AdWords account, there are basically two pieces of information that you need to establish ownership: an email address and a credit card. If you set up an account with your email address and your credit card, if you ever decide to leave your current agency (either to another agency or by going in-house), you get to take your account with you. If the account is set up in the agency’s name, the agency has to transfer the account over to your email address.

Underhanded agencies will often refuse to transfer the account, usually citing “proprietary data” as their reason for not handing it over. This is a problem for two reasons: first, Google gives you a discount on CPCs as a result of your “account history” – if you transfer to a new account, you have to rebuild this account history without the discount. Second, you lose all the data about what has and hasn’t historically worked in your account, meaning you have to repeat the same expensive mistakes over again.

Good agencies put the client first. This means setting up account in the client’s name (even if the bill is paid by the agency’s credit card). It also means sharing all of your knowledge and data with the client and the new agency in the event of a transition.

2. The agency wants you to sign a long contract with restrictive termination clauses.
I recently heard about an SEM contract that locked a client in for three years! If the client cancelled early, the client still had to pay the minimum fee for the remainder of the contract. I can understand asking a client for a six-month or even one-year contract, but anything beyond that is a clear sign that your agency is far more interested in its own profit than your success. If your lawyer raises major red flags about your agency’s proposed contract, don’t renegotiate – find a new agency!

3. Your agency’s account managers (AMs) have the wrong compensation structure
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AMs should have one objective in mind: the success of their clients’ businesses. Sometimes success means increased spend on the search engines (and hence, more revenue for the agency). Many times, however, success is driven through cost savings and lower monthly agency revenue. I think it’s fair to ask your agency how their AMs are compensated – do AMs get a percentage of profit (meaning that if they get you to spend more, they make more)? If so, I question whether an AM with an incentive that’s potentially adverse to your success can really manage your SEM correctly.

4. Your agency’s AMs are reactive, not proactive.
Good SEM shops are both tactical and strategic. Tactical SEM work is the basic nuts and bolts of campaign management – bid adjustments, keyword expansion, and so forth. Strategic SEM is advanced theoretical thinking – suggesting entirely new conversion funnels, testing advanced attribution models, proposing retargeting and behavioral targeting. Good AMs should have a regular schedule of tactical SEM and should always be suggesting new strategic SEM ideas. If you find yourself constantly prodding your AM to do basic tactical work, and you never hear any good strategic SEM ideas, you have a problem.

5. Your agency is unwilling to share information.
Good SEM agencies are highly transparent in everything they do. From strategy, to daily tactics, to compensation and organizational structure, there is no reason you shouldn’t have complete knowledge of how your agency operates. If you get push-back on information-sharing, it’s likely your agency is hiding something from you.

6. Your agency constantly replaces your AM.
It’s a truth of agency life that account managers come and go, so it’s impossible for any agency to promise you the same AM for the life of your account. That being said, if you feel that you are getting a new AM every three to six months, there are a few potentially negative reasons behind this game of musical chairs. First, your agency can’t keep its AMs. Perhaps the agency culture needs improvement, or perhaps the agency is unwilling to properly compensate its team. Second, your agency may be constantly pushing your account down to junior AMs (see discussion of junior AMs below).

7. Your agency wants to sell you too many non-SEM services.
While I do believe that SEM agencies must offer clients more than just SEM these days, there is a difference between offering some complementary services and upselling for the sake of upselling. At PPC Associates, we believe that channels like Facebook PPC, performance display, and landing-page optimization are all services that integrate well with SEM campaigns. I’d get nervous, however, if your agency was trying to sell you on PR, social media monitoring, billboard ads, or other marketing services that are very unconnected from SEM. This usually indicates a lack of focus at the agency, which never bodes well for the quality of their SEM work!

8. Your agency lacks a focus on metrics.
An SEM campaign without granular data analysis is about as effective as throwing darts blindfolded. I recently talked to a struggling SEM manager at a B2B company who had no data beyond “cost per lead” for her program (i.e., whether someone requested a white paper or watched a video). One hundred percent of her company’s sales came from phone or in-person sales. As a result, measuring only to a “lead” was a totally useless exercise.

Your agency should be obsessed with measuring ROI, down to the last penny. This often means setting up advanced tracking (click-to-call, integration with CRMs, upload of revenue into a data warehouse), but good SEM agencies understand that the only way to really separate the wheat from the chaff is through measurement. An agency that doesn’t understand or care about granular measurement is not going to do a good job for you.

9. Your agency assigns you a junior AM.
To paraphrase Malcolm Gladwell, it takes 10,000 hours to be an expert at anything. In the working world, that equates to five years of full-time experience. In SEM, I generally feel like you need at least 1.5 years of solid SEM experience to be a good AM and five or more years to be a great AM (there are always exceptions to the rule, of course). If your main point of contact at your agency recently graduated from college, or recently started in SEM, no amount of intelligence can overcome a sheer lack of experience. You should either ask for a more senior AM or find a new partner.

10. Your monthly spend is way bigger or smaller than the agency’s stated minimum client size.
Agencies establish minimum spend thresholds for a very simple reason: the agency’s internal cost structure only supports certain clients. This generally means that if your monthly spend significantly deviates from your agency’s minimum spend, you are not going to get the service you need. For example, let’s say you are spending $1,000 a month and your agency’s stated minimum spend is $50,000/month. You can be pretty certain that your agency cannot afford to put their best AMs on your account and that you will be getting the most junior team members. Conversely, if you are spending $500,000 a month and your agency’s minimum spend is only $1,000 a month, the odds are high that your agency’s team has been set up to fulfill quantity of clients, rather than provide quality service to clients. As a result, you need to move to an agency that caters to large spenders.

I want to emphasize in closing that there are many great SEM agencies out there beyond PPC Associates. Hopefully the agency that is currently helping you is one of these great ones – if not, you know who to call!

David Rodnitzky, CEO
– Questions? Comments? Email us at blog at ppcassociates dot com.

3 Comments

  1. Peter Thelen January 9th, 2012

    All great points, I love this post!

  2. David Rodnitzky January 9th, 2012

    Thanks Peter. You've seen both sides of this coin!

  3. annoyed customer July 26th, 2013

    found this looking for a solution for our account managed by clickconsult. they refuse to give us access when we cancelled the account, and tried to charge us for IP as you mention in the article. beware, and read your terms and conditions all!

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David Rodnitzky
David Rodnitzky is founder and CEO of 3Q Digital (formerly PPC Associates), a position he has held since the Company's inception in 2008. Prior to 3Q Digital, he held senior marketing roles at several Internet companies, including Rentals.com (2000-2001), FindLaw (2001-2004), Adteractive (2004-2006), and Mercantila (2007-2008). David currently serves on advisory boards for several companies, including Marin Software, MediaBoost, Mediacause, and a stealth travel start-up. David is a regular speaker at major digital marketing conferences and has contributed to numerous influential publications, including Venture Capital Journal, CNN Radio, Newsweek, Advertising Age, and NPR's Marketplace. David has a B.A. with honors from the University of Chicago and a J.D. with honors from the University of Iowa. In his spare time, David enjoys salmon fishing, hiking, spending time with his family, and watching the Iowa Hawkeyes, not necessarily in that order.