North American advertisers spent $9.4 billion on search engine marketing (SEM) in 2006, a 62% increase over 2005 spending, according to an annual industry survey conducted by the Search Engine Marketing Professional Organization (SEMPO).
SEMPO researchers also estimate SEM spending to double by 2011, at an aggregate spending total of $18.6 billion.
Kevin Lee, member of the board of directors of SEMPO and chair of its research committee, said: “These spending figures show that 2006 was a watershed year for the SEM industry.
“We have moved from the first wave of adoption of search-based marketing to the myriad of small and medium sized businesses, many of them startups, using SEM as a fundamental part of their business. In fact, many of these SMB companies have been founded on an e-business model and that is a huge implication for our general economy, going forward.”
SEMPO’s survey found organic SEO (tactics for improving a website’s non-advertising rank in search engines) is still the most popular form of SEM, with almost three-quarters of advertisers using this method, with paid placement a very close second at 71%.
However, in dollars, paid placement accounted for 86% of total spending, or $8 billion. organic SEO accounted for $1.1 billion in spending, or 12%.
Paid inclusion continues its decline, accounting for one percent of total spending, or $94 million. SEM technology platforms account for the remainder, at 1.3%, or $122 million in spending.
One shift from previous years is that direct sales is now as compelling an objective for SEM spending as brand awareness, says SEMPO.
Respondents could give multiple responses to their spending motivation and in 2006, direct sales was the top choice, at 58%, followed by brand awareness as the next most prevalent objective, at 57%.
In addition, 75% of advertisers said they could afford a mild increase in paid placement.
A recent report on US ad spending from Outsell said that advertisers plan to raise their spending for advertising on search engines by 39% (see US Advertising To Grow 5.8% This Year).
Meanwhile, a report from the Kelsey group said that global local search and online classified advertising revenue will grow to $31.1 billion in 2010 (see Local Search And Online Advertising To Grow To $31.1 Billion).
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