Advertisers Will Spend $4 Billion Dollars in
2004 on Search Engine Marketing
December 14, 2004
Chicago, IL (PRWEB) December 14 2004
-- The Search Engine Marketing Professional Organization (SEMPO), a
non-profit professional association working to increase awareness
and promote the value of Search Engine Marketing (SEM) worldwide,
today published a research paper, "The State of Search Engine
Marketing 2004," which concludes that in the U.S. and Canadian
market, advertisers will spend $4.087 billion dollars this year on
search marketing programs. That figure comprises payments to search
engines and search-related media companies, search engine marketing
agencies as well as in-house expenditures in support of such
programs, including "paid placement," "paid inclusion," "organic
search engine optimization" and "search engine marketing technology
platforms" (terms which all are further defined in the report).
�The data indicate that current size of the market for Search Engine
Marketing services is the tip of the iceberg; we have the beginnings
of a healthy industry,� said Kevin Lee, Board of Directors Member
and Chair of the Research Committee of SEMPO. �The research also
suggests that marketers are using a mix of internal and external
solutions to deal with the high level of complexity of the search
marketing space. SEMPO expects increasing competition among
marketers to drive significant growth in Search Engine Marketing and
related services over the next several years.�
�Our mandate is to promote and help grow the search engine marketing
industry for our members and sponsors,� said Barbara Coll,
Chairperson and President of SEMPO. �The logical first step is to
measure how large the industry is today in order to set our
objectives and directions to support future growth. We believe our
2004 advertising and marketing activities are having an effect
already and these results will allow us to confirm these perceptions
moving forward.�
The research, conducted by Executive Summary Consulting, Inc., is
based on an extensive survey of 288 search engine advertisers and
marketing agencies, executed via IntelliSurvey, Inc., as well as
in-depth interviews with 31 leading industry experts. The final
report breaks down advertiser spending for 2004 in several areas:
$3.058 billion to search media companies; $618 million on SEM-related
in-house expenses within advertising corporations; $380 million to
search engine marketing agencies, and $30 million in SEM technology
licensing fees. The report also estimated that marketers will spend
(including both in-house and external media, service and licensing
expenses) $3.342 billion on paid placement campaigns; $492 million
on organic search engine optimization; $182 million on paid
inclusion, and $72 million on SEM-related technology services.
�Most SEM market size reports to date have focused on paid search
advertising and overlook search engine optimization work by
companies and agencies, also ignoring the human resource costs
incurred by companies for paid search marketing operations. This
survey indicates that companies see SEO as an important part of the
search marketing spend, while also staffing their marketing
departments to manage paid search. Both areas have an opportunity
for strong growth,� added Lee.
Notable findings in the study include the following:
- The return on investment of SEM paid placement advertising
continues to stay ahead of price inflation: advertisers said on
average they have witnessed bid prices rise 26% in the last 12
months for keywords they commonly buy but said they could stand on
average another 33% increase in the price and still make a
profitable transaction.
- Only 41% of advertisers reported that SEM budgets were newly
created funds for this purpose; the rest said SEM budgets were
coming in whole or in part from shifts away from traditional or
Internet marketing programs. The biggest shift in terms of share of
budget was transferred from paid listings on shopping directories,
e-mail programs, web display advertising, and print magazine and
newspaper ads.
- Brand awareness was overall the #1 objective advertisers set for
search marketing programs, just beating out sales and lead
generation initiatives.
- 50% of advertiser respondents said that their senior executive
staff considered the company's search marketing initiatives a "high
priority" (although that figure dropped to 32% of companies with
staff sizes larger than 500).
- Advertisers expect to spend, on average, 39% more on all search
marketing programs (organic SEO, paid placement, paid inclusion and
SEM technology) in 2005 compared to 2004; smaller firms projected
32% more while larger firms (larger than 500 employees) projected a
43% year-over-year increase. Meanwhile, SEM agencies optimistically
projected budget overall gross revenue increases for 2005 of 79% on
average.
- Most advertisers plan to manage the majority of their search
marketing spending in-house as opposed to via an agency: 52% of
advertisers said they would manage 100% of their 2005 spending on
both paid inclusion and organic SEO in-house; on average, advertises
said they would outsource 28% of their spending on paid placement
and 29% of their organic SEO through agencies. Large advertisers
were likely to outsource more of those budgets, but still a minority
of their spending for both organic SEO and paid placement.
A complete copy of the research is available to all SEMPO members
and research participants. A summary copy is also publicly available
on SEMPO's web site at http://www.sempo.org/research/sem-trends-2004.php
About the Search Engine Marketing Professional Organization (SEMPO)
SEMPO is a non-profit professional association working to increase
awareness and promote the value of search engine marketing
worldwide. The organization represents the common interests of more
than 315 companies and consultants worldwide and provides them with
a voice in the marketplace. For more information, or to join the
organization, please visit www.SEMPO.org.
About Executive Summary Consulting
Executive Summary Consulting, run by long-time industry analyst Rick
E. Bruner, specializes in market research and strategic consulting
focused on Internet marketing and advertising. For more information,
please visit www.ExecutiveSummary.com.
The source of this news release is
PRWeb.
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