State of Search Engine Marketing 2006

I used to ask why are advertising agencies appear unable or unwilling to embrace search engine marketing as a part of their services. Then I asked someone for clarification. I was told that these agencies prefer the traditional way of advertising — offline and not much into the nuances of online marketing. How can they not do that?

I guess some shift has started to shape the advertising arena. According to SEMPO, the Search Engine Marketing Professionals Organization, search engine marketing is getting further notice from top executives, in its annual “State of Search Engine Marketing 2006” report.

For the first time top honchos consider SEM as a high business priority. Not much with involvement in lower level SEM campaigns, company executives begin to realize the importance of search engine marketing (SEM) the moment they use search engines to locate a product, service or any other piece of information.

Taken from Search Engine Watch:

North American advertisers spent $9.4 billion on search engine marketing (SEM) in 2006, up 63 percent over the $5.75 billion spent on search in 2005, and beating last year’s estimate of $7.2 billion. Spending is projected to grow to $18.6 billion by 2011 in North America, driven by strong advertiser demand, rising keyword pricing and cost per click, a second wave of small-to-midsized businesses discovering the efficacy of search and better search technology. That’s a significant increase from last year’s projection of $11.1 billion in 2010.

Out of the total 2006 spend, $8 billion, or 86 percent of that going to paid search, and $1.1 billion, or 12 percent of overall spending to search engine optimization (SEO). Spending on SEM technologies, including leasing, agency solutions and in-house development, accounts for 1.3 percent of overall spending, or $122 million; and paid inclusion accounted for 1.0 percent of spending, or $94 million.

Survey results show that changes don’t not just in terms of increasing the budget for online marketing purposes, but money previously alloted to newspaper and print magazine ads as well as direct mail.

I share the thoughts of David Lee, who think next year’s numbers will even be more enlightening.