Search engine marketing revs up online advertising

US advertisers spent $5.75bn on search engine marketing in 2005

Advertisers in North America spent $5.75bn on search engine marketing in 2005, a 44 per cent increase over 2004, according to a report released today.

The study from the Search Engine Marketing Professional Organization (Sempo) projected that this spending in North America will reach $11bn in 2010.

The annual totals include payments to search engines and search-related media companies, marketing agencies and in-house expenditure in support of such programmes, paid placement, paid inclusion, organic search engine optimisation and marketing technology platforms.

"This report confirms our belief that search engine marketing has almost single-handedly revived a flagging online advertising marketplace after the stock market crashed in 2000," said Sempo chairman Kevin Lee.

"As consumers have become increasingly reliant on search engines to navigate the web, investors have shown a renewed interest in the digital technologies and in search marketing in particular."

The bulk of the spending during 2005 was on paid placement, accounting for 83 per cent, or $4.7bn. While four out of five advertisers engaged in organic search engine optimisation, this accounted for approximately 11 per cent of overall spending.

Paid inclusion accounted for just four per cent of overall spending, and leasing, agency offerings and in-house development accounted for less than two per cent.

"The data shows that 2005 was a good year for search, but 2006 should be a great year," said Gord Hotchkiss, research committee co-chairman at Sempo.

"The growth has largely been driven by maturation in existing segments, but future growth will be fuelled by an increased search presence from major advertisers and new monetisation strategies from the major engines.

"The increased competitiveness in the marketplace will really drive the industry forward in the coming year."

The survey found that Google and Yahoo still command the lion's share of internet advertising.

Sempo's report, the State of Search Engine Marketing 2005, was based on a survey of 553 respondents conducted in November 2005 by Radar Research and Intellisurvey.