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Since 2004, SEMPO has conducted a widely anticipated annual State of Search Engine Marketing Report, the broadest and most comprehensive look at all aspects of the burgeoning search industry. Today, the 2010 survey published. Econsultancy is proud to have partnered with SEMPO on the research.
The topline finding? Search is up, recession be damned. We estimate the North American search engine marketing industry was worth $14.6B in 2009, up from $13.5B in 2008 and based on 8% year-on-year growth. While the market was sluggish during most of 2009, there was a significant Q4 uptick. This year, we anticipate double-digit growth: up 14% to reach a value of $16.6B by the end of 2010. SEMPO President Sara Holoubek says this is the big takeaway. "Following a rough year for all media, search continued to grow. The anticipated return to double-digit growth is a promising sign that the industry continues its upward trajectory, fueled by advancements such as personalization, local search and mobile."
Where's the money coming from? Other marketing channels.
On the client side, companies are shifting money from other marketing and IT activities into search. They're raiding print advertising budgets (49%); direct mail (36%); conferences and other live events (24%) and online display ads (23%). Agency-side respondents say a hefty 69% see print advertising budgets is shifting to search.
The sixth annual State of Search Engine Marketing Report 2010 is the largest and most international research of its kind. The survey, conducted online in January and February, had close to 1,500 client-side marketers (advertisers) and agency respondents. "We've got very deep data for North America," observes Econsultancy's US Research Director Stefan Tornquist, "but we're also excited about the insight we're gaining into world markets from Brazil to southeast Asia."
Google rules. Hardly news, but we've got a number: 97% of companies buy Google AdWords; 71% pay for ads on Google's search network, and 56% use invest in AdSense. Yahoo, meanwhile, is in a somewhat alarming state of decline. Only half of advertisers are using Yahoo Search, a percentage that's dropped from 68% last year, and 86% in 2008. Ouch.
Forty-four percent of advertisers are buying into Bing, compared with the 54% who said they used Microsoft Live (MSN) search last year. With Google on the ascendant at the expense of competitors, Tornquist observes, "Fewer marketers are fielding campaigns outside of Google. There's no question that marketers are quite pleased with the volume and quality of searchers drawn from Google, but it's a concern that fewer companies are experimenting with the alternatives."
"We were surprised to see that more than half of the advertisers (52%) and agencies (62%) reported keyword inflation when advertising with Google," notes SEMPO's Houlebek. "During the recession, many argued that deflation would occur, as marketers pulled back their spending. As it turns out, it appears that a strong portion of search marketers experienced inflation, suggesting healthy competition for keywords."
On average, companies expect to spend 43% more on SEO this year than in 2009 (44% specifically for North America). Only 9% expect to spend less.
Augmenting spend on search to a small degree -- but influencing search much more profoundly this year -- will be social media, including personalized and social search. Seventy-four percent of agencies report social media's impact on search as moderate to huge. Local search and mobile search are the two other strongly emerging trends to watch. Says Tornquist, "When you look at how marketers view personalization, localization and the relationship between search and social, it seems that there's a view that the industry is entering a phase that will change the practice of search marketing at every level. There's no question it will mean specialized optimization techniques relating to different types of content across different platforms and more importantly, will require a content strategy that takes these changes into account."
In previous years, the State of Search Engine Marketing Report has only been available to SEMPO members and survey respondents. This year the 111-page report is available for purchase and to Econsultancy's premium members.