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This is an extract from an article published in a couple of marketing magazines. There is a saying I use quite often, particularly since the great dot.con – “just because it’s new to you doesn’t mean it’s new to the world”. And I’m finding I’m saying it a lot more recently when discussing search engine marketing and the internet.

The explosion in the number of people working in online marketing means there is a lot of young and inexperienced talent with plenty of responsibility for spending budgets. Unfortunately because much of what they are doing on the internet is new to them, they incorrectly assume it is also new to the world.

And so it is with search engine marketing (SEM) or more specifically Pay Per Click (PPC) advertising. While the execution of PPC advertising online is relatively new, the principles behind it are decades old.

The first PPC advertising was done about 60 years ago by direct marketers in the print media - newspapers and magazines. Direct marketers (usually those spending theirs not their shareholder’s money) negotiated deals with publishers whereby the publisher earned a commission on every coupon the marketer received from an advertisement in the publisher’s newspaper or magazine.

The advertisements were direct response advertisements and the media buying process was known as Pay Per Coupon (PPC) or Pay Per Inquiry. The benefit to the marketer was that they didn’t pay for media if it didn’t generate any responses – they only paid for those people who responded to their ad (just like those who click-through a link today).

The benefit to the media proprietor was that by working closely with the marketer to get the best position for their ads, the proprietor could earn more for an advertisement than they would from the normal advertising rates. Smart media owners knew that a DM budget is unlimited as long as it pays for itself.

The same procedure also applied with direct mail – a marketer would partner with a list owner and reward the list owner based on the replies received to the mail pack.

Then there was a big technology leap, driven by emerging technology that grew the PPC market. This time it was the use of the first generation of online media – that amazing technology that utilised voice data over a landline, commonly known as the telephone.

Marketers ran advertisements in the press and on broadcast media, mostly television, inviting people to reply by telephone if they didn’t want to respond by mail. The remuneration for this format was similar to the Pay Per Coupon model, but this time it was Pay Per Call.

For every call the marketer received they paid the media proprietor a commission. Sometimes there was one fee for calls received and then a higher fee for calls that converted into sales. These are measured as response rates (calls received) as a percentage of people reached. The conversion rate is the number of people who call and take up the offer.

Now that the online space can accommodate data transfer as well as voice, we have the internet, websites and PPC advertising to get people to link to landing pages and websites when they are searching for something relevant to that site. This is pure direct marketing – an individual tells a search engine what they are looking for and in response the search engine posts links to sites that match the search terms, as well as ads that match the search terms.

The individual responds directly to the marketer and the marketer tracks the response. The marketer only pays when people click on their ad and they only pay what they believe a click is worth – just as they paid for the receipt of coupons and phones calls - only now the speed of response is instant and so is the measurement of results.

The upside of course is the speed with which a marketer can measure results and the size of the market they can reach online – that is if a global audience is important to them.

But there is a problem in utopia – and it’s the lack of experienced direct marketers working in digital agencies in the search industry. These digital people don’t understand how to test – terms like split-run, comparative or measurement testing generally aren’t part of their vernacular. They believe, because they don’t know better, that simply matching advertisements to search terms is a job well done.

Copy isn’t tested in advertisements. Active words aren’t tested against passive words to increase click through rates. Landing page tests or split-run ads aren’t tested to increase ROI. And there is a simple reason for this – the people responsible for the PPC campaigns call themselves digital marketers, not direct marketers.

I’m not sure what the term ‘digital agency’ means? Does it mean all other agencies are analogue agencies? Or cathode-ray tube or pressed-type agencies? What amazing skills and magic do they possess that is incomprehensible to a mere analogue marketer – apart from using slightly different software in their art studios?

The problem with most digital agencies and search engine services is that they know a lot about technology and very little about marketing. If they did know marketing and more particularly the way of direct marketing, they’d know the principles and history behind PPC. They would constantly apply tests to either increase results for the same budget, or reduce the budget to get the same results.

But you won’t hear the language of direct marketing amongst digital marketers, because PPC is new to them and they believe it is new to the world. Millions of dollars is being wasted in this space because of the inexperience of both the agency planning the PPC campaigns and the young marketers employing them. So you can’t really blame them, they don’t know better and probably haven’t studied marketing history. But as you well know, those that don’t study history are apt to repeat the mistakes.

I recently saw the media plan from a major digital agency for the launch of a new online retail site. The PPC ads linked to a home page. The customer had to make 4 clicks to get to the offer page and then the shopping cart. A sure-fire formula for failure.

If you haven’t started using PPC, you will be soon, because your customers now use search engines to not just find your website, but your phone number as well. If you don’t have a presence online in search engines you will eventually get left behind. But like any emerging and fast growing market PPC has attracted sharks and snake oil sales people in droves (commonly known as “black hats”) so beware with whom you partner.

If the media planner you’re considering doesn’t use the language of direct marketing, they’re probably more interested in their bottom line than yours and you will pay far more than necessary for your campaign.