Survey: $10 Billion Spent on Search Marketing in '06

Mike Shields
FEBRUARY 08, 2007 -
Advertisers in North America laid out close to 10 billion dollars on search engine marketing in 2006, a year that saw a 62 percent spend increase versus 2005, according to an annual survey conducted by the Search Engine Marketing Professional Organization (SEMPO).

SEMPO found that, based on its survey of 587 search agencies and advertisers, spending in the medium will double by 2011, reaching $18.6 billion (SEMPO counts both paid search advertising and spending on companies’ internal search engine optimization in its dollar estimates, while other firms do not). According to the report, The State of Search Marketing 2006 Executive Summary, that rapid growth will be driven by continued advertiser demand, rising prices and a new wave of small-to-midsize businesses discovering the medium.

Not surprisingly, Google dominates the search advertising business. Among the marketers and agencies surveyed, 96 percent of them report using Google AdWords to promote their brands.

Yet despite its recent urgent push to improve its own search ad technology, Yahoo is on solid footing according to SEMPO respondents. More than four out of five advertisers--86 percent--say they have run ads on Yahoo’s search product.

Meanwhile MSN, which has struggled in a distant third-place position in the search race, even losing some market share in recent months, has made great strides among advertisers, found SEMPO. Sixty-eight percent of advertisers said they used MSN for their search campaigns in 2006, up from just 29 percent in 2005.

The reason for MSN’s surge is that despite low usage, the search engine’s ad environment is less cluttered, and it tends to deliver the right ads to users. “The ROI on MSN is extremely strong,” said Kevin Lee, co-founder of Did-it.com and chair of the SEMPO research committee. “And there is not anywhere near the competition, as it’s a less mature marketplace.”

Another less-than-mature marketplace is that of search advertising for brand advertisers. Despite claims that more and more brands are using the medium for branding, as most respondents reported, just 21 percent of search advertisers actually track or measure the branding impact of search for their campaigns.

Lee said that in practice, more brands are looking at a combination of search and branding metrics. “A lot of search marketers are being more holistic.”