Search Engine Marketing (SEM) Spending is Rising

By Michael Kramer // Mar 14, 2012 at 05:02 PM

Search Engine Marketing Is Cannibalizing Print Media

Spending on search engine marketing (SEM) in North America is expected to hit $26 billion by 2013, as the industry continues to grow and SEM and search engine optimization (SEO) become deeply embedded in marketers’ advertising strategies, according to the 2008 annual survey and forecast from the Search Engine Marketing Professionals Organization (SEMPO).

Search Engine Marketing (SEM) Spending is Rising

The new 2008 report estimates industry spending in 2008 at $13.5 billion, and forecasts spending to reach $14.7 billion in 2009, $16.7 billion in 2010 and $19.8 billion in 2011. These projections have been revised downward from the 2007 report to reflect the current state of the economy. (Click charts to enlarge.)

SEMPO previously predicted the industry would grow from $15.7 billion in 2008 to $18.8 billion in 2009. Despite the downward corrections, the report predicts an upswing in spending as the economy recovers in 2011 and as marketers become more interested in new search-targeting technologies, such as “search retargeting.”

“The State of Search Engine Marketing 2008″ study, conducted by Radar Research, also reveals that SEM is currently poaching budget money from other, mostly traditional media, but that this cannibalization appears to be leveling off as new budget dollars get allocated to SEM.

The report provides key details about the search engine marketing industry size, where spending is being directed and key industry trends, as well as a spending analysis for 2008 by tactic and spending forecast for 2008 to 2013.

Key findings are detailed below.

Industry Spend: $13B and Growing

The 2008 report forecasts that North American spending on SEM for 2008 will total more than $13.4 billion.

Search Engine Marketing (SEM) Spending is Rising

  • The bulk of spending (88%, or $11.9 billion) will be spent on paid placement.
  • 91% of advertisers say they engage in organic search engine optimization (SEO), which will account for approximately 11% of overall spending, or over $1.4 billion.

Search Engine Marketing (SEM) Spending is Rising

  • The market for SEM technologies, including leasing, agency solutions and in-house development, will account for 1.1% of overall spending, or $141 million.

Factors that are less predictable that may affect the growth of the SEM industry include the overall effect of the recession and the impact of potential consolidation among the major players Yahoo, Microsoft, Time Warner and Google, SEMPO said.

Google Reigns as Market Leader

The gap between the unquestionably dominant Google (GOOG) and other search engines continues to widen. Today, nearly every engine marketer (98%) is advertising with Google AdWords, while the number of campaigns on Yahoo (YHOO) and MSN (MSFT) search engines are declining:

  • In 2006, more than 4 out of every 5 advertisers (86%) ran campaigns on Yahoo Sponsored Search, but that number dropped to 70% in 2007 and in 2008 fell to 68%.
  • MSN remains in third place, behind Google and Yahoo, with 54% of respondents running campaigns on Live Search by MSN, consistent with 2007.
Posted in Santa Barbara Website Development.