The search marketing rocket is just blasting off, study says

Spending on search engine marketing in the United States and Canada, at $5.75 billion a 44% increase in 2005, will reach $11 billion in 2010, according to a report from the Search Engine Marketing Professional Organization.

“This report confirms our belief that search engine marketing has almost single handedly revived a flagging online advertising marketplace after the stock market crashed in 2000,” says Kevin Lee, chair of SEMPRO.

The figures include payments to search engines, media companies, marketing companies and in-house expenditures in support of search engine marketing. Programs under search marketing include paid placement, paid inclusion, organic search engine optimization and search engine marketing technology platforms. Results were based on an industry-wide survey of 553 respondents conducted in November 2005.

The majority of SEM spending in 2005 was on paid placement, which accounts for 83% of the year’s total spending, or $4.7 billion. Four out of five advertisers reported participating in organic search optimization, which accounted for 11% of overall spending. Paid inclusion accounts for about 4% of spending, while SEM technologies including those that are leased, developed in-house or agency solutions, accounts for less than 2% of spending.

The survey also found that Google and Yahoo command the largest share of Internet advertising; and that branding, sales, leads and traffic are the top objectives of paid placement programs. The survey also determined that little SEM spending is newly-created with most being shifted from other budgets; and that advertisers and agencies "are approaching their pricing limits.”

Future growth in SEM spending, according to survey findings, will be fueled by an increased search presence from major advertisers and new offerings and pricing strategies from the major engines.