SEM agencies "control" majority of spending

Kevin Newcomb of ClickZ takes a look at JupiterResearch data that indicates that Search Engine Marketing (SEM) agencies now control most search money. A very interesting development, indeed.

In the “I like to be right” department (hey, who doesn’t?), I’m going to continue to press the point that there might be something else to the rumor a week or so back about Google talking to advertising agencies. As I noted in my alternative perspective on the rumor:

“To date, Google has primarily been seen as a competitor to Overture in the search-related advertising space (e.g., SEM, Contextual, Local, et al). However, with the Yahoo! acquisition of Overture, Yahoo! now has the opportunity to market additional advertising services (across all of Yahoo!’s properties) to Overture’s base of 100K+ advertisers.

Google doesn’t have a comparable offering… but a strategic partnership with (or acquisition of) a respected advertising agency would give them the ability to co/cross-sell advertising services, influence spend allocation in a multi-channel marketing strategy, etc.”

(There’s a bit more if you follow the link.)

It would be a far harder task for agencies to backward integrate into Google/Overture’s business than it would be for Google/Overture to forward integrate into the agency business (both companies already provide rudimentary agency-like services). That, plus control over the bidded marketplace, puts the search co’s in the dominate position (IMO), despite agency control of advertiser relationships.

That makes an acquisition less urgent… but strategic partnerships (including automated advertising, i.e., an API into the bidded marketplace like the one I worked on over at Overture) could pay off handsomely for all parties.

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