Search trade group cuts revenue forecast

Posted 10 March 2009 19:27pm by John Gaffney with 1 comment

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Even search engines get the blues. In a report that has not been officially released yet, the Search Engine Marketing Professional Organization, (SEMPO), says North American search marketing spending will increase only 9 percent to $14.7 billion in 2009 from $13.5 billion a year ago. Estimates made in early 2008 projected that the industry would grow at more than twice that rate this year, from $15.7 billion in 2008 to $18.8 billion in 2009. The new SEMPO forecasts call for the industry to reach $19.8 billion in 2011, down from a previous estimate of $25.2 billion for that year.

What happened? The simple answer is the economy, which Google CEO Eric Schmidt called "pretty dire" last week. But the report raises some very important issues that cannot be explained away by a simple economic downturn. Among them:

• Amount of active advertisers: Some attrition of small-to-medium sized businesses can be expected in this economy. On the other hand it would be reasonable to expect that more companies will embrace search as a low-cost high ROI tactic.
• Non-Google Revenue: How much growth comes from other search engines? The danger of a dominant company in any business is that "as they go, so goes the industry." If the report finds that there is some growth beyond Google, these numbers look different.
• New advertisers: According to The Wall Street Journal, which leaked the topline results of the report, more than 25 percent of advertisers surveyed said they would switch budgets into search from print magazines. Nineteen percent said they would switch from newspapers. It's hard to know how much revenue that will account for. Both newspapers and magazines are high-ticket budgets when compared to search.

Although search, along with social media, has been the last bastion of exponential growth in internet marketing, it has to be considered that 9 percent growth in this economy might not be bad. Disappointing, but not devastating. As anyone in the TV  or print business will tell you: "Flat is the new profitable."