The UK paid search market is expected to grow by 14% and reach a value of £4.19bn by the end of 2012, up from £3.68bn in 2011. 

The figure, published today in our UK Paid Search Agencies Buyer’s Guide, includes media spend and money spent on agency services and consultancy. 

Despite challenging economic conditions, the growth in the amount of money being spent on paid search reflects the fact that it remains an effective and measurable channel for generating a positive return on investment.

The flexible nature of paid search, whether in terms of spend, campaign duration and timing, or user targeting, also provides benefits which are not so direct in other forms of marketing.

This year’s estimate for marketplace growth, which factors in the worsening economic climate, is broadly in line with published quarterly earnings reports from Google, which now break out UK revenues. These reports show that Google increased its UK revenues by 18.7% between Q1 2011 and Q2 2012, with the UK market accounting for 10.8% of its total revenue.

Our UK Search Engine Marketing Benchmark Report 2012, published last week in association with NetBooster, showed that companies are using agencies for a diverse range of services relating to their paid search activity.

In addition to these services, the UK Search Engine Benchmark Report showed that companies are increasingly turning to agencies for services as paid search becomes more complex

Qualitative responses to our survey showed that the specialist services sought by companies included help with integrating social media into their campaigns, multilingual and multi-territory campaigns, lead nurturing, data services and landing page optimisation.

This complexity is a theme covered in the buyer’s guide, which lists some of the significant changes made by Google and other search engines in their attempt to increase their offerings both to advertisers and to end users.

Not surprisingly, however, the core purpose of paid search remains in driving sales and leads, with over half of company respondents to the Econsultancy / NetBooster survey stating that their primary objectives from paid search were to drive direct online sales and for lead generation.

What changes have you noticed in paid search? Is more work being done in-house? Are companies relying on agencies for more specialist services?  

Please share your comments below...

Andrew Warren-Payne

Published 30 May, 2012 by Andrew Warren-Payne

Andrew Warren-Payne is a Senior Research Analyst at Econsultancy. Follow him on Twitter or Google+

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Comments (7)

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John Courtney

John Courtney, CEO and Executive Chairman at Pay on Results SEO, Content Marketing, Social Media, Digital PR, PPC & CRO from Strategy Digital

Excellent report, as always from econsultancy, well done!

Some interesting developments from Google, which have yet to be rolled out in the UK, are described here.

about 5 years ago

Andrew Warren-Payne

Andrew Warren-Payne, Senior Research Analyst at Econsultancy

Thanks John - glad to hear you've found the report useful!

about 5 years ago

Sri Sharma

Sri Sharma, Managing Director at nmp

valuable report and interesting highlights. thks! Our observations are consistent. Clients need more insight eg competitor research, more granular optimisation, more coverage across a fragmented host of platforms. Yes, I agree, the specialist is needed.

about 5 years ago

Panos Ladas

Panos Ladas, Digital Marketing Manager at Piece of Cake

This rate of growth is impressive, is it sustainable?

about 5 years ago

Jonathan Beeston

Jonathan Beeston, Director, New Product Innovation, EMEA at Media & Advertising Solutions, Adobe

The IAB reckon last year £2.78bn was spent on paid search media. I realise your number (£3.68bn) includes services and consultancy, but I wondered if you could comment on your methodology cf. the IAB's. A further £900m on services (32% of media spend) seems high.

BTW Google's UK YoY revenues increase is closer to 21% in GBP terms, even more impressive. Though how much of that is pure Adwords spend, vs display etc, is up for discussion.

about 5 years ago

Linus Gregoriadis

Linus Gregoriadis, Research Director at Econsultancy, Centaur Marketing

@Panos The growth of paid search spending will plateau at some point which is one of the reasons why Google has diversified so much. Its overall strategy seems to be to encourage advertisers to spend more money on digital, with paid search as an important part of the mix. Witness its investment in Multi-Channel Funnels which can help to show the value of other channels such as display advertising as part of the overall mix.

@Jonathan. Our estimate for the marketplace is based on a combination of information received from agencies and advertisers, and various in-house and third party data points, including Google financials and our own UK Search Marketing Benchmark Report.

We are aware of the IAB's valuation but we are more bullish than them on media spend.

According to our UK Search Engine Marketing Benchmark Report, advertisers are - on average - paying 9% on paid search agency management fees. Paid search bid management tech also needs to be factored in.

about 5 years ago

Panos Ladas

Panos Ladas, Digital Marketing Manager at Piece of Cake

@Linus Still Google seems to be making most of their revenue from just one (or you may say 2) products: AdWords. What they are trying to diversify to is display advertising and this is something that they are working on for the last 5+ years, since they acquired DoubleClick!!

Obviously they do have some success to that and they are way more focused now than they have been before but it seems to me that they never actually managed to diversify, they just attempt to do something like this, fail and then try again (and as a matter of fact, they can afford to!)

almost 5 years ago

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