European marketers will spend almost €3 billion on search engine marketing by 2010, with growth in France particularly strong, rising by more than 30%, according to a report from Forrester Research.
Forrester projects that spending will increase by a massive 65% year on year during 2005, to total €1.4 billion.
Spending in the UK is forecast to reach €1 billion by 2010, up from €765 million in 2005, while Germany will enjoy a rise of €234 million, taking its total up to €399 million in 2010, from €165 million in 2004.
Despite the healthy growth, Forrester predicts search engine marketing to decline in terms of its share of the overall online advertising market.
This is, in part, due to the concurrent growth of rich media advertisements, spurred by expanding broadband access, and also because of the rising price of key words.
Earlier this year, eMarketer predicted 2005 to be a strong year for online advertising, with rich media advertising forecast to grow by 27% (see Rich Media Advertising Set For A Strong 2005).
A survey by the Search Engine Marketing Professional Organisation (SEMPO), conducted in 2004, found that over 60% of respondents reported that advert prices for keywords had risen by at least 10%, with 6% saying prices had at least doubled.
Hellen Omwando, consumer markets analyst at Forrester does not think that prices in Europe will reach the levels in the US and Canada, but they will affect spending.
Commenting on the research she said: “Increases will be significant enough to make it difficult for some marketers to justify the ROI of high prices; they won’t be able to compete for popular keywords.”
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