North American advertisers spent $9.4 billion on search engine marketing (SEM) in 2006, a 62 percent increase over 2005 spending, according to an annual industry survey conducted by the Search Engine Marketing Professional Organization (SEMPO) www.sempo.org. SEMPO researchers also estimate SEM spending to double by 2011, at an aggregate spending total of $18.6 billion.
North American advertisers spent $9.4 billion on search engine marketing
(SEM) in 2006, a 62 percent increase over 2005 spending, according to an
annual industry survey conducted by the Search Engine Marketing
Professional Organization (SEMPO) www.sempo.org.
SEMPO researchers also estimate SEM spending to double by 2011, at an
aggregate spending total of $18.6 billion.
The report, “The State of Search Engine
Marketing 2006,” collected data on spending
trends by agencies and in-house advertisers. The SEM programs surveyed
include paid placement, paid inclusion, organic search engine
optimization (SEO) and SEM technology platforms. The report is based on
an industrywide survey of 587 respondents –
both agency and in-house advertisers –
conducted in November and December 2006 by Radar Research, LLC and
Intellisurvey.
“These spending figures show that 2006 was a
watershed year for the SEM industry. We have moved from the first wave
of adoption of search-based marketing to the myriad of small and medium
sized businesses, many of them startups, using SEM as a fundamental part
of their business. In fact, many of these SMB companies have been
founded on an e-business model and that is a huge implication for our
general economy, going forward,” says Kevin
Lee, member of the Board of Directors of SEMPO and chair of its Research
Committee.
“SEM is bringing results and is helping to
fuel the Internet-based economy which in turn is driving SEM spending,”
he adds.
Spending Trends
SEMPO’s survey found organic SEO (tactics for
improving a website's non-advertising rank in search engines) is still
the most popular form of SEM, with almost three-quarters of
advertisers using this method, with paid placement a very close second
at 71 percent. However, in dollars, paid placement accounted for 86
percent of total spending, or $8 billion. Organic SEO accounted for $1.1
billion in spending, or 12 percent. Paid inclusion continues its
decline, accounting for one percent of total spending, or $94 million.
SEM technology platforms account for the remainder, at 1.3 percent, or
$122 million in spending.
One shift from previous years is that direct sales is now as compelling
an objective for SEM spending as brand awareness. Respondents could give
multiple responses to their spending motivation and in 2006, direct
sales was the top choice, at 58 percent, followed by brand awareness as
the next most prevalent objective, at 57 percent.
“It’s a healthy
trend that direct sales is becoming a primary reason for SEM spending.
The SEM industry is under pressure to show ROI and linking spending to
direct sales will prove that SEM can contribute effectively to a company’s
profit picture,” says SEMPO Research
Committee Co-chair, Gord Hotchkiss.
MSN Gaining on Competition
The SEMPO survey also found that MSN is gaining on Google and Yahoo!,
now ranking third in paid placement SEM. In one year, MSN has made
tremendous progress: in 2005 only 29 percent of respondents said they
were using MSN; in 2006 that number rose to 68 percent.
Google AdWords continues its reign as most popular search advertising
program, used by 96 percent of respondents. Yahoo registered 86 percent
of respondents saying they used the program.
In other trends:
-
75% of advertisers said they could afford a mild increase in paid
placement; the remaining 25% say they have topped out in cost per lead
spending
-
SEM continues to poach budget from other marketing channels,
especially offline marketing programs
-
In-house marketing programs continue to grow, portending further
consolidation on the agency side of the business
About the Search Engine Marketing Professional Organization (SEMPO)
SEMPO is a global non-profit organization serving the search engine
marketing industry and marketing professionals engaged in it. Its
purpose is to provide a foundation for industry growth through building
stronger relationships, fostering awareness, providing education,
promoting the industry, generating research, and creating a better
understanding of search and its role in marketing. SEMPO represents the
common interests of more than 450 companies and consultants worldwide
and provides them with a voice in the marketplace. SEMPO’s
education and outreach initiatives are sponsored in part by Microsoft,
Yahoo!, Google, Verizon Superpages.com, Atlas, and Search Engine
Strategies. For more information, or to join the organization, please
visit http://www.SEMPO.org.
About Radar Research, LLC
Radar Research is a Los Angeles-based research and consulting firm aimed
at the nexus of media, technology, culture and commerce. It was founded
by two former Jupiter Research analysts, Marissa Gluck and Aram
Sinnreich. Radar conducts research on behalf of both corporate clients
and non-profit organizations, such as DoubleClick, Sony Pictures
Entertainment, Nielsen//Netratings, the Online Publishers Association
and The Norman Lear Center. For more information, please visit www.radarresearch.com.
About IntelliSurvey, Inc.
IntelliSurvey helps organizations, including leading research firms and
in-house researchers, make better business decisions by gathering
intelligence from their customers, members, and prospects. For more
information, please visit www.IntelliSurvey.com.
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Jupiter Finds Increased Demand For Local SEM
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Kevin Newcomb at SEW writes up new findings from JupiterResearch's regular search marketing survey. [...]
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