March 17, 2009, 12:00 AM

Search engine marketing spending is rising – but more slowly, survey says

New data from the Search Engine Marketing Professional Organization finds SEM spending was about $2.3 billion less than forecasted.

Search engine marketing is still growing, but its growth rate is taking a hit from a faltering economy, according to an annual survey by the Search Engine Marketing Professional Organization. The group estimated North American spending on search engine marketing in 2008 at $13.4 billion– down from the $15.7 billion the group had forecast in last year`s survey. The survey report forecast that spending on search engine marketing will reach $14.7 billion in 2009, last year’s survey had predicted it would reach $18.8 billion.

Longer term, the survey predicted search engine marketing spending will grow to $26.1 billion by 2011, factoring in a predicted upswing in spending as the economy recovers.

The survey’s analysis of 2008 search engine marketing spending estimates 88% or $11.9 billion of the total spend went to paid placements. Organic search engine optimization accounted for 11% of spending , or about $1.4 billion. Though it accounted for far less of the spending total, organic search was the most popular search engine marketing technique, used by 89% of those surveyed. Only 72% used paid placement. The use of SEM technologies, including those that were leased as well as those that were developed by agencies or in house, was estimated at $141 million or 1.1%. Such technologies include automated keyword bidding systems, for example.

Though total spending on search engine marketing is projected to rise, in part from an influx of participation by smaller companies, the findings showed that, overall, marketers are more cautious about spending in 2009 than before. In 2007, two-thirds of marketers surveyed predicted they’d increase their spending on paid placement campaigns in 2008. But in this most recent poll, just over half said they plan to increase spending in 2009. Almost one-third of advertisers in the survey said they expect to spend the same in 2009 as they did last year, a jump from the 18% who said they planned to spend the same in 2008 as they did in 2007. 14% in this year’s survey said they planned to spend less this year.

Spending on search engine marketing is taking away from spending on other channels, especially print, the survey found. More than one- quarter of the marketers reported they are shifting budgets away from print magazines while 21% said there are shifting budget from direct mail. 19% said they are shifting budget from print newspaper advertising.

The survey, commissioned of Radar Research and Intellisurvey, was based on results from 890 search engine marketers, mostly based in North America.

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