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SEM Spend to Grow as Marketers Shift Budgets amid Economic Concerns

Search engine marketing (SEM) spending is taking budget share from other marketing efforts - not only offline but also online - according to preliminary findings from the 2007 State of the Market survey by the Search Engine Marketing Professional Organization (SEMPO), reports MarketingCharts.

Essentially, SEM is following consumers as they increasingly rely on search engines to conduct pre-purchase research, according to SEMPO.

The findings, released this week at the Search Engine Strategies conference, found that SEM spending exceeded projections in 2007 and, according to marketers and agencies surveyed, will continue to grow.

Among the key findings issued:

• 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 is now projected to grow to $25.2 billion in 2011, up significantly from the $18.6 billion forecast a year ago.
• Marketers are finding more search dollars by poaching budget from print magazine spending, website development, direct mail and other marketing programs - view chart (via Search Engine Watch blog).
• Paid placement captures 87.4 percent of 2007 spending; organic SEO, 10.5 percent; paid inclusion, 0.07 percent, and technology investment, 1.4 percent.
• Google AdWords remains the most popular search advertising program, but both Google and Yahoo sponsored search spending has decreased from a year ago.

The drivers behind the anticipated growth, according to respondents, are advertiser demand, rising costs of keywords and pay-per-click campaigns, an increase in the number of small-to-midsize businesses using SEM, greater consumer participation in search, and increased interest in targeting, such as behavioral and demographic targeting of searchers.

MarketingCharts has some more findings from the study.