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 Search Spend Appears Strong Despite Slowing Economy
“Growth Projected To Reach $25.2 Billion In 2011”
New York -- Despite progressively depressing economic projections, spending on search engine marketing continues to develop beyond expectations. The nonprofit Search Engine Marketing Professional Organization (SEMPO) surveyed over 867 search engine advertisers and SEM agencies to get a picture of the state of the search engine marketing industry.
According to the survey, search engine marketing spending exceeded projections in 2007, and is estimated to demonstrate continued healthy growth over the coming years, based on survey responses by marketers and agencies. One caution: If there is no stock to buy as a result of a recession or economic downturn, it would not matter what marketers say they want to do.
“Preliminary results of the 2007 State of the Market Survey were released at Search Engine Strategies New York by SEMPO, the Search Engine Marketing Professional Organization.”
“For us the story was the continued optimism around search,” said Gord Hotchkiss, SEMPO chairman and president, Enquiro Search Solutions.
According to the survey, they found that things look rosy for the search engine marketing industry. The North American SEM industry grew from $9.4 to $12.2 billion from 2006 to 2007. Forecasts for this year were that the industry would reach $25.2 billion by 2011. Again, the projection is up significantly - last year the projection was $18.6 billion.
While the figures seems to be robust and reveals a desire for marketers to continue to spend on search, the survey cannot approximate the result of a shortage of search inventory caused by a major economic downturn.
Although some of the growing expenditure is in new ad dollars, some of it is the result of moving marketing dollars from other offline and online marketing endeavors, with offline ads the biggest losers.
Search is attracting spending away from things like magazines, direct mail and newspapers more so than TV, which is a bit puzzling, says Kevin Lee, executive chairman of Didit and co-chair of SEMPO’s research committee.
“I am surprised we are not seeing as big a shift from TV. Search is getting more budgets from offline media that are usually used to narrow-cast, instead of TV and radio, which are broadcast media,” Lee said. “It does not make a lot of sense, but maybe it is because it is being moved from something niche-y to something else that is niche-y? As search becomes more recognized as something that brand advertisers can use, I would expect to see more TV and radio dollars shift as well.”
The detailed online survey by Radar Research was completed by 867 search engine advertisers and SEM agencies and administered via IntelliSurvey, Inc.
Preliminary Key Findings Include:
- The North American SEM industry grew from $9.4 billion in 2006 to $12.2 billion in 2007, exceeding earlier projections of $11.5 billion for 2007
- North American SEM spending is now projected to grow to $25.2 billion in 2011, up significantly from the $18.6 billion forecast a year ago.
- Marketers are finding more search dollars by poaching budget from print magazine spending, web site development, direct mail and other marketing programs.
- Paid placement captures 87.4% of 2007 spending; organic SEO, 10.5%; paid inclusion, .07%, and technology investment, 1.4%.
Interviewees are expecting to increase their search spend this year, due to factors like advertiserpay-per-click campaigns; an increase in the number of small-to-midsized businesses using search engine marketing; and greater consumer participation in search and increased interest in targeting, such as behavioral and demographic targeting of searchers. demand; rising costs of keywords and
“The spending statistics show search engine marketing continues to prove its worth in the larger marketing arena,” says Jeffrey Pruitt, SEMPO president and executive vice president, corporate partnerships, iCrossing.
Survey results also indicated that paid placement consisted of 87.4% of all search spending in 2007, while organic search was 10.5%. In addition, paid inclusion was .07% and technology investment was 1.4%.
Marketers are still getting great ROI from paid search, Lee said. It appears that they are not going to abandon search for other mediums, even if the cost keywords and pay-per-click campaigns get more expensive, he said.
This should be particularly good news for Google, since it is the only search engine in the top four to get a bigger share of the market. Google AdWords remains the most popular search advertising program, but both Google and Yahoo sponsored search spending has decreased from a year ago. 97% of the marketers’ survey uses Google AdWords. 70% utilize Yahoo Sponsored Search and less marketers use MSN and Ask.com than last year.
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