Extra stress aside, I do enjoy operating a booth and I do enjoy search conferences. This year’s SMX Advanced seemed to come and go without warning, like the craptastic weather we had this week (only that’s not “going” so much as “lingering like Paris Hilton’s herpes”). I barely got to see some of my friends and colleagues before they headed back home (though the office was bustling with visitors yesterday, making for both a welcome and annoying distraction: welcome because it’s nice to see the Critchlows, Eric Enge, Rob Kerry, Dean Chew, and Gab Goldenberg, annoying because we only have one bathroom…d’oh).
Anyway, I’ll provide a few tidbits of notes I scratched down from a few sessions I attended and then weigh in with how I felt this year’s SMX Advanced compared to last year’s (first) conference. If you don’t want to read the session recaps, skip down to the part where I get all opinionated.
Getting Ad Copy RightI didn’t take notes on every speaker, but here’s what I did capture:
Jason Dorn from Yahoo!:
- Poor ad group structure and keyword selection drive >90% of the failing ads we see.
- Your creative is a 2 second dialog with a searcher. It’s crucial that your creative looks like you spent more time, interest, and energy creating the ad than the searcher took to find it.
- Most clarity issues stem from carelessness. Take some time to review how your creatives will scan, because even simple errors (such as typos) can cripple your ability to compete.
- Call out a competitive edge. Determine what your edge is by looking at the competition. If everyone’s talking about the same “edge,” it’s not an edge, my friend.
Mona Eleisseily from Page Zero Media:
- Cater ads to different buyer needs.
- Test price, information that reassures buyers (e.g., “official site,” “24/7 support”), and time sensitivity (e.g., “Offer ends soon”).
- Your ad copy should be appropriate “in feel” to the industry category (e.g., no slang or informal ads if your business is formal/professional).
Brian Kaminski from iProspect:
- Understand what makes you special and why people choose you.
- Test for your desired outcome, not just your clickthrough rate.
- Keep an eye on your competitors’ keywords, messaging, deals/offers, and conversion flow.
Conversion OptimizationTom Leung from Google:
- Band landing pages are where good leads go to die.
- Ad creatives are viewed in 0-3 seconds, occupy 3% of pixels, and capture no commitment.
- Landing pages are viewed in 0-20 seconds, occupy 100% of pixels, and capture demonstrated commitment.
- Closing pages are viewed in 2-3 minutes, occupy 100% of pixels, and capture significant commitment.
Jon Mendez from RAMP Digital:
- It’s a fact that consumers know more about what they want than you ever will.
- Flip the funnel/sales triangle. The top of the triangle should be content (location), then context (relevance), then intelligence (content), then tools (search).
Guy whose name I didn’t catch:
- 87% of paid search advertisers aren’t satisfied with their campaign conversion rates.
- 60% aren’t doing testing/optimization of any kind.
- The majority are testing using manual A/B testing.
- 3 key steps to optimized campaigns are analyzing your audience and its needs, embracing marketing and design best practices, and testing everything (all of your assumptions).
Funding, Valuing, & Selling SEM BusinessesThis was my favorite session because it was different than any other panel I’ve attended. Michelle Goldberg, Ignition partner, SEOmoz funder, and Rebecca Kelley mentor (the latter position being the most important of all), gave her insight:
There are three types of companies in our industry:
Type: Agency/Consultancy
Valuation: 1x net revenue (what you’re making) or 5-6x EBIT (Earnings Before Interest and Taxes)
Criteria:
- Client list (deep in a vertical, fill a hole, customer profitability, concentration). Understand how profitably you serve your customers. You also want predictability and the ability to measure based on that.
- Scalability (sole proprietor vs. training others; repeatable methodology; tools). Are you starting to create tools that can scale your company?
Type: Technology and Tools
Valuation:
- Up to 12-20x in revenue and bookings
- Purely tool-based can be valued less. The tools market has been commoditized, but Michelle thinks it can come back based on whats’ going on now in SEO/SEM.
- Technology valued more than creativity or strategy
Exit strategy:
- Sell to a strategic/financial buyer. Strategic buyers are more likely because they’ll want to keep you out of the hands of a competitor.
- IPO potential
Criteria:
- Types of revenues
- One time vs. recurring
- How profitable the company is (look at gross margins and bottom line of EBITDA)
Type: Content/Subscription
Valuation:
- Multiple bookings/subscribers
- 5-6x revenue (20-30x EBITDA if there’s any cash flow positive)
- Average of $10 per monthly unique, or $0.10 per page view
Exit strategy:
- Offline avenue acquiring online content
- Growth (maintenance)
- Seamless customer experience
Criteria:
Likely acquirers:
- Digital marketing firms
- Traditional agencies
- Agency holding companies
- Website aggregators (for blogs and content sites)
- Offline media
- Private equity firms
What does Michelle look for when offering venture capital investment?
- The team. She looks for people who have been in the space and have some thought leadership but are really thinking deeper. She also looks for companies that can be very big companies. Michelle prefers to fund companies rather than just features or products, which are really just smaller ideas. These companies really have to go for the big idea in order to exit in a way that makes sense for everyone.
- The market. You have to be in the right timing of a market. You can be right on trends but wrong on timing (in which case your money will run out), so it’s imperative to be able to hit things in the right way.
- Technology/tools
- Repeatable, scalable, recurring revenue
- Are focused but have a growth plan
Lastly, someone asked the difference between private equity and venture capital. Private equity firms use debt to leverage themselves to buy big companies/growth companies and ride some equity waves. They create efficiencies in the company by breaking off certain points, bulking them up, and selling them in a different form. Venture capital firms often come in at the idea stage and work with companies to create a vision and start on the correct path to really build value.
Rod Lenniger from iCrossing spoke next. He said in 2007 the marketing sector had a record year in deals. It was a $60.3 billion deal value in marketing overall, and seven of those deals were for greater than $1 billion. There were 758 total transactions (an increase of 63% I think from the previous year), and of those transactions, 225 were in digital services (amassing $16.2 billion). There were 19 deals in the online marketing services sector, and the average revenue multiple was 5.2x, while the average EBITDA multiple was 22.8x.
If you’re buying an SEM business, what should you do right?
- Have a target profile at the start
- Make sure the culture fit is as important as the financials
- Grasp the business model: how do they make money
- Plan scenarios
- Sell to owners committed to their employees
- Communicate!
What should you do better?
- Don’t have an overly aggressive timeline
- Scrutinize over term sheet details
- Be wary of a “no shop” clause (the company shopping around to find the highest bidder)
- Prep the board
- Communicate!
What should you do differently?
- Set realistic time frames (double your time frame for international dieals)
- Involve team leads from both companies early and often
- Communicate!
Lastly, Sean McMahon from EngineWorks discussed focusing on value. Provide the value beyond the services rendered by building the strongest team possible, establishing a presence in the space, and executing on your business models. By doing so, your value to the marketplace will take care of itself.
Why should you consider selling? Think “What’s in it for me?”
- Planned exit/reward strategy
- Greater upside potential
- Better position the company for success
- Timing
Ultimately, the decision has to do with timing, the structure of the arrangement, the track record of the purchasing management team, and the commitment of the purchasing founders.
Aside from the “Give It Up” session, this was my favorite panel simply because I learned a wealth of new information about valuing SEM companies and was able to glean some insight from a purchaser’s perspective. It was a refreshing angle after having attended countless conferences and hearing the same panels over and over again.
Those are all the notes I took. I didn’t attend too many sessions because I was at our booth on and off throughout the conference. I did sit in on the Analytics and the Give It Up session, both of which I found to be entertaining and valuable.
Okay, now for my super awesome opinion of how SMX Advanced 2008 went. Overall, I have to say that it was an improvement from 2007. The organic tracks I attended felt more advanced than last year’s tracks, and this year’s Give It Up was a vast improvement as well. I do think that the paid search sessions were still kind of weak–as you saw in my above notes, many speakers gave pretty straightforward information like “Don’t be careless with your ads.” I’m a huge paid search noob, but these sessions all felt pretty basic to me. Is there any way to beef up PPC and drill down into the meatier stuff, or is this as advanced as it gets?
I did prefer last year’s “After Dark” party over this year’s. Last year’s party was hosted by Google and it had a bar, music, and a rollerskating Susan. This year the “After Dark” party felt like last year’s kickoff event–didn’t have the same vibe to it. Oh well. I did get to stuff my face with Skittles. I tasted the rainbow, all right.
Lastly, I agree with Jane’s recap post. I don’t think Advanced was overtly black hat. Most of the sessions seemed informative and not shady. The only exception was some of the tactics shared in the Give It Up panel, but most of the panelists shared at least one white hat tactic in addition to their more “sinister” stuff. Plus, you and I know that the reason people attend the Give It Up session is to hear a deliciously top secret, hush hush tidbit that isn’t common knowledge, and “Content is king!” ain’t gonna cut it. Black hat tips are entertaining. The audience loved them, and it’s up to them as to whether they’re smart enough to understand the risk involved when dabbling in the black arts and will STFU, as Brent put it, if they actually do have the balls to try one of the tips offered up.
If I were Danny, I wouldn’t apologize just yet. Wait to hear more feedback before feeling remorseful about a conference that ended less than 48 hours ago. I certainly didn’t have many bad things to say about it (and I’m arguably the most critical person employed here)–contrarily, I think it’s essential to have a conference that specifically focuses on advanced search issues, and you shouldn’t discount your audience and think that they won’t understand or appreciate black or gray hat tactics, not even from an adopting standpoint but merely as a way to further understand search methodologies.
So, to summarize:
Location: good
Weather: atrocious
Food: good
Booth: stressful, but rewarding
Networking: brief but fantastic (it was great meeting SEOmoz members like Brent D. Payne, Richard Baxter, John Tompkins, PixelBella, the woman whose avatar is the cartooney bandit girl, troublemaker Darren Slatten, and many more folks)
Seeing colleagues and friends: All too brief. Unlike those bloated-ass three day conferences, SMX Advanced is blissfully short, but the downside is that it felt like it came and went far too rapidly, so I didn’t get a chance to hang out with some buddies as much as I would have liked (I did have a fantastic dinner with Chris Winfield, Brent Csutoras, Adam Sussman, Todd Malicoat, Lauren Vaccarello, Tony Adam, and Greg and Shari [whose last names I forgot]).
Conference: solid
Advancedness: improving
Parties: fine
SEOmoz party: explosion (there were tons more people than last year!)
Okay, I’m done. Now it’s time for me to try to sleep the entire weekend and fail miserably when I realize I have mounds of work to do. Bummer. Nap time in July? I hope?
