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Which UK search marketing agency makes £220K gross profit per employee?

According to the latest NMA UK Search Marketing League Table, Net Planet Media achieved income (or gross profit) of £5.2m last year. Based on a head count of 24, that works out at just under £220K gross profit per employee. Pretty impressive by anyone’s standards. Bigmouthmedia topped the table with a total income of £13.4m.

This is the first time that NMA have used income rather than turnover as the measure for ranking – interestingly, a number of the higher placed firms from last year (based on turnover) were “unable” to supply figures this year – notably The Search Works and iCrossing.

As guide editor Nic Howell explains: “This year we’ve made an important change by basing some of the financial rankings on the income, or gross profit, that companies earn from their given specialism. This brings the Marketing Services Guide into line with its sister publication, theTop 100 Interactive Agencies guide, as well as other tables published by Centaur and other publishing groups. But we also believe that, as the industry matures, for certain sectors turnover is becoming a less useful measure of what a company earns for its expertise. In search, for example, with Google having withdrawn agency remuneration, there’s less incentive for agencies to buy paid search on behalf of their clients. We expect to see agencies earn money from consultancy fees rather than commission and kickbacks.”

However, given that Google’s Best Practice Funding really only ended in February of this year, we will have to wait until next year’s table in order to truly see the impact this will have on search marketing agencies profitability. For example, Netmediaplanet derives 100pc of its revenue from paid search – I have no idea whether or not they benefitted from Google’s BPF, but will be interesting to see if they can maintain or improve on last year’s impressive financial performance.

Here’s my quick analysis of the overall table:

Average gross profit per employee for the top 30 UK search marketing firms is around £70K. Having said that, there is a very wide range – all points between £220K and £10K.

In 2007, the top 30 agencies employed 1258 people – last year, this figure had dropped to 1154. I appreciate that we aren’t really comparing like with like given the new criteria being used by NMA.  However, even though some agencies have clearly  increased staffing levels eg Bigmouthmedia, some have obviously dropped eg Latitude, down to 98 from 120.

Another interesting trend was the number of search marketing firms who are creating or expanding their own online PR teams. According to Jack Hubbard of 14th ranked Propellernet in a recent interview: “The growth in demand for and subsequent expansion of our online PR team is taking the industry by storm. Bringing together creative PR’s and analytical search experts is generating some great new thinking, and pushing new frontiers for our clients. I’ve never been so excited to be in this space.”

Given Volvo’s recent well documented decision and Ruder Finn’s just published research that shows a great degree of “irritation” by clients with PR firms when pricing online PR proposals, the current robust financial figures for search firms – combined with their obvious expansion plans into the realm of PR – shows that the PR industry needs to continue to work hard to justify its place at the client table.

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“You can’t predict the return on investment you don’t make” David Griner

Fear and Loathing in Social Media[gigya width=”425″ height=”355″ src=”″ quality=”high” wmode=”tranparent” ]
Excellent presentation from David Griner of
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Guardiantech: 564,698 Twitter followers: 0.4pc (or less) click through rate on links

The Guardian Technology Twitter account has 564,698 followers (as of lunch time today). Helpfully, they use bitly as their URL shorterner of choice for distributing links for Guardian news stories and blog posts. Which means anyone can see the click through rates for any given link. Looking at the last week or so, the highest I’ve found so far is around 2.300 for this story.  Generally, the click through rates are around the 1,500 mark.

So – even with a huge bunch of followers, the click through rates for links put out by Guardiantech on Twitter are around 0.4pc or less.  (Now and again, a link of mine might generate 150 – 200 click throughs – so as a percentage of my Twitter followers (606) that’s not too bad).

Of course, you could use Backtweet to determine where else the links end up – but even here the numbers aren’t huge.

The really interesting data from a PR standpoint would be how many views a story  or post gets in total from all sources – and only the site owners have that data. Getting access to that would help PRs to better understand the value/influence of the coverage they generate.

Also – adding followers doesn’t necessarily translate into increased link click throughs.

Digital marketing digital pr General PR online pr tech pr Technology PR

PR: the parallels between Page Rank and Public Relations

In SEO circles, the term PR is more likely to refer to Page Rank than Public Relations.  However, in the world of online PR, both have a role to play. In fact, the parallels between Page Rank and Public Relations are closer than you might expect.

But what is Page Rank? Phil Craven’s explanation is the best I’ve seen:

PageRank is a numeric value that represents how important a page is on the web. Google figures that when one page links to another page, it is effectively casting a vote for the other page. The more votes that are cast for a page, the more important the page must be. Also, the importance of the page that is casting the vote determines how important the vote itself is. Google calculates a page’s importance from the votes cast for it. How important each vote is is taken into account when a page’s PageRank is calculated.  PageRank is Google’s way of deciding a page’s importance. It matters because it is one of the factors that determines a page’s ranking in the search results. It isn’t the only factor that Google uses to rank pages, but it is an important one.

Phil also highlights some other key factors about Page Rank that are not immediately obvious:

The values shown in the Google toolbar are not the actual PageRank figures. According to the equation, and to the creators of Google, the billions of pages on the web average out to a PageRank of 1.0 per page. So the total PageRank on the web is equal to the number of pages on the web * 1, which equals a lot of PageRank spread around the web. (Google passed the trillion mark for indexed pages last year and says it is adding billions daily). The Google toolbar range is from 1 to 10. (They sometimes show 0, but that figure isn’t believed to be a PageRank calculation result). What Google does is divide the full range of actual PageRanks on the web into 10 parts – each part is represented by a value as shown in the toolbar. So the toolbar values only show what part of the overall range a page’s PageRank is in, and not the actual PageRank itself. The numbers in the toolbar are just labels. The toolbar value is a good indicator of a page’s PageRank but it only indicates that a page is in a certain range of the overall scale. One PR5 page could be just above the PR5 division and another PR5 page could be just below the PR6 division – almost a whole division (toolbar point) between them.

A page “votes” an amount of PageRank onto each page that it links to. The amount of PageRank that it has to vote with is a little less than its own PageRank value (its own value * 0.85). This value is shared equally between all the pages that it links to.

From this, we could conclude that a link from a page with PR4 and 5 outbound links is worth more than a link from a page with PR8 and 100 outbound links. The PageRank of a page that links to yours is important but the number of links on that page is also important. The more links there are on a page, the less PageRank value your page will receive from it.

If the PageRank value differences between PR1, PR2,…..PR10 were equal then that conclusion would hold up, but many people believe that the values between PR1 and PR10 (the maximum) are set on a logarithmic scale, and there is very good reason for believing it. Nobody outside Google knows for sure one way or the other, but the chances are high that the scale is logarithmic, or similar. If so, it means that it takes a lot more additional PageRank for a page to move up to the next PageRank level that it did to move up from the previous PageRank level. The result is that it reverses the previous conclusion, so that a link from a PR8 page that has lots of outbound links is worth more than a link from a PR4 page that has only a few outbound links.

Outbound links are a drain on a site’s total PageRank. They leak PageRank. To counter the drain, try to ensure that the links are reciprocated. Because of the PageRank of the pages at each end of an external link, and the number of links out from those pages, reciprocal links can gain or lose PageRank. You need to take care when choosing where to exchange links.

So what has this got to do with public relations? Think of it this way. You could consider PR as the attempt to gain positive “votes” from a target audience. And the votes from some places are going to be more important than others. In a media relations context, you can either try to get lots of small circulation coverage (Page Rank 0 links) or a small number of more influential titles (ie a link from a Page Rank  8 page – in media terms the home page of national newspaper. The analogy holds up because not all pages on a site have equal page rank). The further up the influence scale you go, the effort required increases logarithmically. And it’s better to be the only brand mentioned rather than one among many – because the “voting power” of the linking page is spread equally amongst it’s links. However, this only applies if you are comparing titles with similiar influence. Getting talked about in the FT with other companies is better than being the only one being referred to in a less influential title.

Take the example of PR as a keyword term – see full analysis here. The Wikipedia page ranks number one – even though it appears to have comparatively fewer backlinks than other pages on the results page. However, when you examine the Page Rank of those linking pages, you can see that they are from higher ranked pages. Quality trumps quantity.

Also, you need reciprocity. As shown above, to increase your authority, you can’t just make the communication one way – you need “votes” to come back your way.  But they have to be the right kind of links – and how you ask for them will have an impact on whether or not you will get a return link (in public relations terms, this is equivalent to ringing up a journalist and asking him to write about your client with no attempt at relevance and personalisation. Or actually taking the time to research a properly targetted pitch).

I realise – like all analogies – this one breaks down. But in the world of online PR, public relations and Page Rank are not as different as you think.

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Volvo hires media buying agency to handle online PR: not such a bad idea?

It has been a busy few weeks, so this blog post covers a lot of ground from Internet World, to the recent NMK online PR debate and the repercussions of Volvo’s decision to hire Mindshare to handle digital PR.

First up, Gerry Brown (*), Bloor Research’s Lead Analyst on Digital Marketing, reports that the recent Internet World show at Earl’s Court saw a 26pc increase in visitor numbers.

As Gerry says: “Over 22,000 seats were filled in free seminars and keynote presentations. Such were the queues that probably another 8,000 were on their tippy-toes outside the theatres struggling to get a glimpse of the presenters and pick up a few words of wisdom. Interesting. Hardly what you would expect for a digital marketing event in these difficult times. After all, marketing is the first department to get cut in a recession, right?”

Right. The fact is, marketing budgets are being cut across the board – but digital is the one area to benefit. A recent survey from Forrester showed that 60pc of marketing budget holders expect to fund increases in interactive marketing expenditure by taking it away from traditional marketing techniques. And the biggest losers? Direct mail and print advertising (both newspapers and magazines).

Those PR folk who still think print coverage is more valuable than online ought to take note of this latter point – as print circulations decline and advertising revenues shrink, the amount of editorial real estate available becomes smaller – and as media consumption patterns continue to shift in favour of digital, then the default focus on print based media relations becomes even harder to justify.

So the reasons for the crowds at the Internet World show are not that difficult to explain. However, as Gerry Brown points out:  “Some might argue that a little knowledge is a dangerous thing, and many left being converted to the idea that digital marketing is ‘the next big thing’ without really understanding the how, when, where or how.”

Which neatly brings me on to the recent NMK event, which debated the question “What Happens To Online PR?”  Numerous people have already blogged about the proceedings – however, the thing that struck me most about the evening was that out of the 85 or so attendees, there were – at most – two client side representatives. For me, this is the key question: what do clients actually make of the whole online/digital/social media PR situation?

Thus Volvo’s decision to hire a media planning agency (Mindshare) to handle its entire digital PR and social media strategy couldn’t be more timely.

This has apparently set “alarm bells ringing” at PR firms up and down the land claims PR Week. So should PR firms be worried? Yes and no. In my experience, media buying agencies have access to much better data on which to base their approach (certainly in the FMCG arena, and increasingly in business to business) – I also think their planning skills are generally better than PR firms (perhaps because they are using better data?). Does that mean that all online PR work should go to media buying firms? No. But Volvo’s decision does give an insight into the kinds of skills, expertise and assets that clients value. And it is up to PR firms to realign their skillsets and resources around what clients really value. (Having spent a week in New York, the phrase “digital land grab” seems to be one of the most overused on both sides of the Atlantic – but PR firms generally aren’t the ones doing the grabbing).

As Duncan Forrester, Volvo’s UK Head of PR (and the man who hired Mindshare)  said: “It’s about partnering with an agency who really understand the Volvo brand, its customers as well as the online audiences and influencers. It’s also about partnering with the right agency who can deliver on the brief.”

And there’s the nub of it.  Clients need people who understand their business (and their customers) – and they will gravitate towards that expertise and experience wherever they can find it.
(*) Commercial footnote: Those client side PRs and marketers who are looking for a way to bridge business understanding with digital marketing expertise may be interested in a Digital Masterclass that Gerry Brown and myself will be presenting in Central London on Tuesday 16th June 2009.  There are still some places available, so click here for more information.
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Why do 47 UK tech PR firms bother with Google advertising when nobody clicks?

According to Google’s own figures, there are currently 47 UK PR firms who are bidding on the phrase “technology PR”. Given that there are around 53 searches per day in the UK on the term, you might think this makes it worthwhile for these firms to invest some time and energy on the exercise.  Google also suggests that in order to gain a number one advertiser slot, you’d need to be paying in the region of £6 per click through.

However, based on Google’s own Adword Traffic Estimator tool, the number one ranked advertiser can expect to get zero click throughs.  (The reason why the CPC rate is so high even though there is no click through interest is explained here).

Which suggests that Google advertising for this particular term is a waste of time.  In fact, it is a similar story with related terms such as “technology public relations”, “IT PR”, etc.

But what about natural search rankings? Isn’t this good news for Speed Communications whose page currently ranks number one? (or rather, the old Rainier home page URL – this now asks browsers to click through to the new Speed home page). Again, based on average rates, this should result in this particular page receiving an average maximum of 22 click throughs per day.  Then again, according to Microsoft’s Commercial Intent tool, only 1 in 4 searchers on the term “technology PR” are potential buyers – the other 75pc are informational browsers (rival PR firms as per Wadds recent post?).

Still, even 5 possible leads per day can’t be bad for Speed. And maybe some of those informational browsers may turn into paying customers at some point (or employees).

However, the validity of this exercise hinges upon the data provided by Google. Are none of the 47 current Google Adwords advertisers getting any click throughs? It would be good to know (don’t need people to reveal actual numbers – just whether the above analysis bears out any resemblance to reality). Given that many of the claims for the accountability of online PR will be based upon clients and agencies trusting this kind of data, I for one am all ears.

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Blog post inspires MSc PR dissertation topic – input wanted

I received an e-mail recently from Robert Corbishley of Stirling University who said that my blog post about the value placed on print versus online coverage had inspired him to write his MSc PR dissertation around the subject.

According to Robert, he’ll be looking at what three different groups think about the value of print versus web coverage – namely, the editorial staff of titles, their readers, and PR agency professionals who work with them. Do these groups agree on the value of print v. web? How do they think their views will change in 5 years time ?

Robert is looking for input from all three groups to help provide robust evidence and input to the research. So if you have any views or thoughts on the matter, please e-mail Robert here.