SMX -Day1 -Creating Value in your SEM Business

Second session of Business Track I attended.

Same Moderator Chris Elwell, President of Third Door Media

Panelists: Sean J. McMahon, President of EngineWorks Bruce Clay, President of Bruce Clay, Matt Naeger, Executive Vice President Operations at Impaqt.

Sean McMahon: What is Value? – A fair return for something or a monetary worth. One acts to gain or keep. (favorite author Ayn Rand.) Talked about co-founding TrafficLeader, which was later sold to Marchex, first certified paid inclusion. Talked about how out of need for Best Buy, Home Depot, others with 1000s products and pages wanted to include and regularly update organic listings. Made it a “win-win” for search engines. Inktomi was first partner – monetize natural search and improve index relevancy through direct feeds.

If you focus on creating value into every client engagement, value in marketplace will follow. Marchex saw value of TrafficLeader – instant access and credibility.

EngineWorks provides value to mid tier clients, who want the sophistication of high end mgmt, but don’t necessarily have the budgets. Talked about creating value from paid search by keyword research then rolling out learnings to other channels in marketing mix (beyond search and online). Lisa Kline example – went from hollywood related kws to celebrity kws, traffic increased 7X. Then used it in other media. Using search as a test platform for messaging in other channels. Another example – Martha Stewart Online pale green buckets (keyword) turned into MS Living cover after learned popularity in search. Using kw research and search testing to identify market trends.

Bruce Clay: Started out as one man from dining room table in 96. Now has 39 employees and 11 openings. (made jokes about tax requirements if over 50 employees…) 5 year growth – 40 – 70% compounded. Worldwide offices – London, Cape Town, Sydney, Tokyo, China and looking at Brazil. His business is based on referral; quality over quantity.

Assets are STAFF, tools, TRAINING, and methodologies. Internships are required for staff. Training is REQUIRED for staff and CLIENTS. Employee retention is crucial.

Intention is that every client becomes a testimonial. They make clients take their 3-5 day training course or they refuse to take the contract. Knowledge transfer is important, not have to constantly re-train client. Projects go 4X faster. Clients totally understand what they are buying. Min contract term is 2!! years. Every account has a 4 person team.

When want to sell an SEM company, actual valuation is 4.3 x Revenue or 11.3 times EBITDA. (later when questioned, said he got these from newsletters and market indices he reads and stays on top of….but not looking to sell his company because he loves what he does.)

Matt Naeger: from Impaqt. Matt says you need to decide what kind of company you want to be, and what kind of clients do you want to work with (Enterprise, SMB or boutique.) Then you have to decide what your are comfortable in managing. Only take on clients that fit the size of your company. Keep your reputation in mind. The client is interviewing you but you should be interviewing them at the same time.

Don’t be afraid to share knowledge with clients and the industry. Blogs, articles, etc. help accomplish this. Let your clients in on what you know and what you are doing.

Impaqt – started in 1999. 6 people, didn’t target anyone – took every client. 99->04, rapid growth, like search space itself. Too many clients, too little time. Grow for growth’s sake (Jupiter Constellation). Decided to focus on Enterprise clients, which they felt they could service best.

Employee retention is the most important thing you can do. (All panelists chimed in when questioned later) Employees who are there the first 5 years, give them some ownership. Create a reward event. Never stop innovating. Now they (Impaqt) hire young people out of school with “good pedigree” who are out to change the world. Give them mentors and let them add value to your company.

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