Results from past campaigns speak volumes about the skills of the company you want to pick. Obviously, if their previous campaigns were a failure, you wouldn't pick them. Ask what past campaigns they had, what the return on investment was, how these campaigns were executed (i.e. where did they publish PPC ads ‐ AdWords, or smaller networks), etc. It is true that you can't be given access to trade secrets, so some of the questions you want to ask might not be OK, but if a SEM company can't show results, this is a reason to move on to the next on your list.

2 Background Check Them

Their past results might look gorgeous (or at least the set of campaigns they tell you about) but this alone isn't enough. It is quite possible that the campaigns you were told about aren't representative about their work, so it's pretty misleading. Therefore, you need more proof about their skills.

You can ask them for references and search with Google and in forums what their customers say. While this isn't a 100 percent evidence either, if there is a lot of negative feedback about a SEM company, this almost always means they are no good. Of course, it is possible that this negative feedback isn't authentic ‐ i.e. their competitors are bad-mouthing them ‐ but if you find genuine negative/positive opinions, do take them in earnest.

3 Check What Services They Offer

One point to consider is the assortment of services they offer. Do they have all the services you need? If they don't, you still could consider them but in this case you will have to look elsewhere for the services they don't offer. It is a bit of a burden for you to split the work but if the company you want to hire is very good at what it offers, it makes sense to hire them for part of the work only and search for the other services elsewhere.

4 Ask How They Report Results

With SEM, it is more than vital to have data about results as soon as possible. Real-time reporting is best because it allows to adjust your budget depending on the results but it could be very time consuming. Once a day is more or less acceptable, though still you could blow your whole budget in a single day without getting any results.

Because of this, it matters really a lot how (i.e. in a report, a spreadsheet, or any other way) and how frequently your SEM company reports you the results. Some companies might not report at all by the end of the campaign and if this is the case, just leave this SEM company ‐ you can lose a lot, if you hire them.

5 Look for Boutique SEM Companies

If you want quality, you won't find it in the 'department store' type of companies. Look for boutique companies ‐ i.e. small companies focused on quality that do only or mainly SEM. You might think that bigger is better but this certainly isn't the case, especially when you are a small client. Big companies won't have the time and motivation to serve you well, while boutique companies tend to provide better care (though don't take this for granted).

6 Are They Specifically a SEM Company or Are They a Jack of All Trades?

Many companies offer SEM services but not for all of them this is a core business. Web design/development companies offer SEM as a secondary service. As a result, frequently quality and expertise are huge problems when SEM/SEO isn't the core business of the company. If the company you are interested in seems to be a Jack of All Trades (and Master of None), it's way too risky to hire them.

7 Ask to See the Contract in Advance

No matter how great a SEM company looks according to the other criteria, one thing you must never forget is the contract. While sometimes you won't have to sign any contract at all, there are also cases when you are presented with a 10+ page legal gibberish that even an experienced lawyer won't understand completely.

The problem with contracts is that they might contain clauses that really hurt. For instance, the SEM company might want to tie you with huge penalties, if you leave them before the 5+ year contract expires, or they might have a door open to constant price increases while keeping you tied. Needless to say, if you see any similar unfair clauses in the contract, just move to the next company on the list.

8 Check How Their Own Site Is Ranking

Similarly to the process of choosing a SEO company, you would want to see how the SEM company you are about to choose is performing for their own site. Of course, the number of backlinks and their quality are more important for a SEO company than for a SEM one, so if their organic ranking isn't superb, this doesn't necessarily mean they are bad at SEM. However, in any case, if their site is not ranking well, this isn't a good sign. You may use some of the ranking services, not only PageRank, to get a better idea of how they are performing.

9 Price Too Low/Too High

Price shouldn't be your most important criterion when making any choice but still it is not something to neglect. If the price is not right (i.e. it's either too low or too high), this should ring a bell. When it is too low, you must have concerns about quality ‐ good quality comes at a price. On the other hand, if the price is too high, this isn't a guarantee for quality ‐ it smells much like a ripoff.

There are many factors to consider when choosing a SEM company. While it isn't rocket science, there are many things to watch for. If you don't choose a good SEM company, this could do you more harm than good, not to mention how much money you can lose. This is why it makes sense to exercise caution ‐ it's better to be safe than sorry.