Advertisers Will Spend $4 Billion Dollars in 2004 on Search Engine Marketing

Advertisers Will Spend $4 Billion Dollars in 2004 on Search Engine Marketing According to the Search Engine Marketing Professional Organization (SEMPO)

Advertisers Expected to Spend on Average an Additional 39% in 2005 on Their Combined Search Engine Marketing Programs Compared to 2004

Chicago, IL - 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".

from the SEMPO press release.

Here is a summary of major points in the SEMPO report:

• "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."
  
  
• The research report is based on an extensive survey of 288 search engine advertisers and marketing agencies, executed via IntelliSurvey, Inc.
  
  
• The final report breaks down US advertiser spending for 2004 in several areas:
  
  
  
  
  

  Amount	SEM category
  $3.342 billion	paid placement campaigns
  $492 million	organic search engine optimization
  $182 million	paid inclusion
  $72 million	SEM-related technology services.

  
  
  
  
• 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 ...
  
  
  
• 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;
  
  
  
• 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 for both organic SEO and paid placement.