The Origianl Efficient Frontier Curve

For those of you interested in where our company derived our name from (Efficient Frontier), read this recent NY Times article about the 20th year anniversery of Black Monday on October 19th, 1987.

Diversify those (stock and keyword) portfolios!

European SEM Kick Backs from the Big Search Engines

The head of our sales team in Europe had the following insights to share on the practice of Google "kicking back" agency fees to European and UK SEM firms.

But, for starters, this link will tell you everything you need to know about BPF.

Basically, if you are managing spend on behalf of clients anywhere in EMEA then you qualify for BPF. Its payable on an incremental tiered basis.

Roughly speaking agencies get 3% for the first €1M spend under mgt in any one quarter; 4% payable on the next €1M; 5% on the next €1M; all the way upto a max 8% payment. To qualify, the agency brings the clients accounts underneath our MCC and the agency qualifies. This is the same for clients where we deliver technology only and clients for whom we deliver full service.

Y! and MSN pay differently. Y! pay a flat 10% on all spend under management and MSN pays a flat 15% on all spend = they need the spend!

Google will release their BPF plan for 2008 in late September 2007. It creates a uneven playing surface for clients booking direct and clients using agencies. It also means that many agencies can give services for free and just live on rebate revenue, but as these are payable at end of quarter on 60 day terns, cash flow is poor which typically equals poor service for end client.

While it’s fairly common practice for specialist SEM firms to pass back 100% of rebates to their clients. The larger digital agencies tend to keep it.

Commentary from REAL SEM firms operating in APAC and Europe: BPF and rebate stinks. It keeps bad search agencies in business. Large media agencies are used to getting handouts from TV/Radio/Press so think they can continue like that in the brave new world. If you do a decent days work and add value you deserve a fee and your fee is in proportionate to value; hence the good firms will be alright if rebates disappear.

Google doesn't need this cost of sale, especially given that wide spread practice for agencies is to hand it back 100%.

We knew we were good, but...

We have always known that we at Efficient Frontier had the special sauce, but what has always been difficult in our process of signing up new customers is the education part.

In a 12 - 14 hour working day that is filled with 14 - 18 hours worth of work, it's often times tough to get people to listen to why portfolio theory is so much more efficient and sophisticated than rules based solutions that don't even work in the new opaque market places.

Well, here, some of the work has been done for us. This article does a great job of explaining what we do. What it doesn't do is state that our approach, our level of sophistication, has been met by exactly no one. Make no mistake, there's only one solution for large(r) kw campaigns and it's Efficient Frontier.

Google Fails to Deliver with Product Offering

For all of the hype around Google and all the cool stuff they are doing, the reality at the Goog is much different.

Even with smaller, less technical products, they can't get their act together.

Just look at this: http://blog.ask.com/2007/02/the_latest_goog.html

Come on Google!

Google Quality Score

For those of you looking to get better educated on Google's quality score, look no further than this article here for look under the hood on how Google applies it's quality score to keyword bids.

Algorithms are Everywhere!`

Lots of SEM companies out there claim to use complex algorithms in an effort to figure out the optimal bid position/CPC for PPC marketing keywords. As far as I know, Efficient Frontier is the only company really doing this (yes, I know, shameless plug). Nonetheless, here's a nice overview of the history of the algorithm on Seth Goldsteins Blog.

Tivo to provide search capabilities for ads

I know this is old news, but it wasn't to me when I read about it today, so I thought I would share it here...

In the next few months Tivo will be rolling out functionality which will allow users the ability to search ads that they want to see on their Tivo unit.

It's all about search and it's all about working with, not against, the marketers.