By Melissa Campanelli, Editor-in-Chief, eM+C Magazine
March 20, 2008
Despite the economic doom and gloom facing most industries today, search engine marketing spending has exceeded projections in 2007 and, based on survey responses by marketers and agencies, the search marketing industry will exhibit continued healthy growth.
These were key preliminary findings of the 2007 State of the Market survey by the Search Engine Marketing Professional Organization, which was released earlier this week at the Search Engine Strategies conference.
However, the survey warned that a major economic downturn has caused a shortage of search inventory or searches. But a key finding from the survey is that search marketing spending is increasing at the expense of print magazine advertising, Web site development and other marketing functions, as marketers essentially shift the portions of their spending pie to follow consumers as they increasingly rely on search engines to conduct pre-purchase research.
The online survey by Radar Research was completed by 867 search engine advertisers and SEM agencies and administered via IntelliSurvey.
Other key findings include:
- The North American SEM industry grew from $9.4 billion in 2006 to $12.2 billion in 2007, exceeding earlier projections of $11.5 billion for 2007.
- North American SEM spending now is projected to grow to $25.2 billion in 2011, up significantly from the $18.6 billion forecast a year ago. According to respondents, the key drivers behind this higher estimate are advertiser demand; rising costs of keywords and pay-per-click campaigns; an increase in the number of small-to-midsized businesses using search engine marketing; greater consumer participation in search; and increased interest in targeting, such as behavioral and demographic targeting of searchers.
- Paid placement captured 87.4 percent of 2007 spending; organic SEO, 10.5 percent; paid inclusion, 0.7 percent; and technology investment, 1.4 percent.
- Fewer advertiser respondents in 2007 reported an increase in paid placement prices than the previous year -- two-thirds compared to almost three-quarters in 2006. However, a key finding is that, as with last year, approximately 75 percent said they could tolerate further rises in paid placement prices. Also like last year, more than half of that 75 percent want those expected price increases to be 30 percent or less.
