INSIGHTanalysis: Search Targeted Marketing Success Story Continues
Paid-for search listings are the second most popular online advertising format, now accounting for 36% of the total internet ad market in the UK, according to new figures from the Internet Advertising Bureau (IAB).
The new IAB figures indicate that a similar growth can be expected in the UK market, where search advertising’s share has risen from 30% in H1 2002 to 36% in H1 2003. At the end of 2002, the IAB estimated that the sector represented only 12% of the total online ad market in UK. This shows how fast search marketing is developing in the UK as well as the US.
Figures from Forrester Research estimate that search marketing will account for 27.5% of total digital marketing in the US in 2003. Digital marketing includes all activity on websites, online ads and email marketing. By 2008 this share is forecast to have jumped to 35.9% of digital marketing. This is a 193% increase for search advertising spend over the 2003-2008 period.
| US Digital Marketing Spend Forecasts ($m) | ||||||
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |
| Email marketing | 1,220 | 1,308 | 1,393 | 1,476 | 1,570 | 1,668 |
| Search engine marketing | 1,916 | 2,774 | 3,594 | 4,372 | 5,074 | 5,617 |
| Display advertising | 3,836 | 4,461 | 5,187 | 6,179 | 7,174 | 8,341 |
| Total digital marketing | 6,973 | 8,543 | 10,174 | 12,027 | 13,817 | 15,625 |
| % of total marketing | 2% | 3% | 3% | 3% | 3% | 4% |
| Source: Forrester Research, October 2003 | ||||||
| US Digital Marketing Spend Growth Forecasts (%) | |||||
| 2004 | 2005 | 2006 | 2007 | 2008 | |
| Email marketing | 7.2 | 6.5 | 6.0 | 6.4 | 6.2 |
| Search engine marketing | 44.8 | 29.6 | 21.6 | 16.1 | 10.7 |
| Display advertising | 16.3 | 16.3 | 19.1 | 16.1 | 16.3 |
| Total digital marketing | 22.5 | 19.1 | 18.2 | 14.9 | 13.1 |
| Source: Forrester Research, October 2003 | |||||
Search marketing will be by far the fastest growing area in the US online advertising market over the next four years, according to Forrester’s forecasts, as shown in the table and graph above.
The IAB expects that the UK online ad market will top £300 million for the full year 2003, after H1 spend came in at £151 million. If the year does close at £300 million, then search marketing’s 36% share will value the sector at £108 million. Digital agency i-level is forecasting that UK online spend will rise by 65% this year, putting the total at £325 million.
Should the UK follow the same growth trends as Forrester forecasts for the US market, search marketing would be worth around £315 million by 2008.