US and Canadian Marketers to Spend $4 Billion on Search Engine Marketing

by , Dec 17, 2004, 12:00 AM
  • Comment
  • Recommend
Subscribe to Research Brief

Tags

US and Canadian Marketers to Spend $4 Billion on Search Engine Marketing

The Search Engine Marketing Professional Organization (SEMPO) 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"

The final report breaks down advertiser spending for 2004 in several areas:

  • $3.058 billion to search media companies
  • $618 million on SEM-related in-house expenses within advertising corporations
  • $380 million to search engine marketing agencies
  • $30 million in SEM technology licensing fees

The report also estimated that marketers will spend (including both in-house and external media, service and licensing expenses)

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

Notable findings in the study include the following:

  • Advertisers said on average they have witnessed bid prices rise 26% in the last 12 months for keywords they commonly buy but said they could stand on average another 33% increase in the price and still make a profitable transaction.
  • 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.
  • SEM agencies optimistically projected budget overall gross revenue increases for 2005 of 79% on average.
  • 52% of advertisers said they would manage 100% of their 2005 spending on both paid inclusion and organic SEO in-house;
  • On average, advertises said they would outsource 28% of their spending on paid placement and 29% of their organic SEO through agencies.

    A summary copy of the research is publicly available on SEMPO's web site.

    • Comment
    • Recommend

    Be the first to comment on "US and Canadian Marketers to Spend $4 Billion on Search Engine Marketing"

    Leave a Comment

    Sign in to leave a comment. Don't have an account? Join Now

    Recent Research Brief Articles

    » Research Brief Archives