State of the Search Engine Industry Report

Search engine marketing is big business. According to the survey organized by the Search Engine Marketing Professional Organization (SEMPO) , marketers in Canada and the U.S. spent $5.75 billion on all forms of SEM last year. This includes paid search ads and search engine optimization (SEO) of Web pages for better “organic” search results rankings; paid inclusion—advertisers who paid a fee to have their pages indexed by search engines, without ranking guarantees—and the money spent on search-related technology and outsourced services. Other findings of the survey are:

• Of the $5.75 billion, about 83% or $4.7 billion went for sponsored search ads or keyword bids. By contrast, advertisers laid out only $643 million, or 11% of the total spend on organic search engine optimization
• 80% of the advertisers polled reported using SEO in 2005, compared to 76% who said they engaged in paid ad placement, and about 40% who said they used paid inclusion tactics during the year.
• Lion's share of advertising went to Google (95%) and Yahoo! (59%). The pair lead the paid-search pack, followed by MSN (29%), MIVA (28%), Ask Jeeves (24%), Business.com (15%), LookSmart (13%) and Kanoodle (14%).
• Marketers' objectives in engaging in paid placement are: branding, sales, leads and traffic
• Little SEM funding is newly created; most is shifted from other programs such as affiliate marketing, Yellow Pages advertising, e-mail marketing, direct mail and TV spots.
• Advertisers and agencies are approaching their pricing limits.
• More than half of all respondents said they have at least tested local search. Of those, 23% reported that it “works great”, 31% found it “okay” and 13% were “unimpressed”.

The full report is available at sempo.org to its members (non-members only get to peak at the press release).