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UK firms have been increasing their investment in paid search and SEO over the last 12 months, though lack of internal resources is the biggest problem affecting the success of search marketing.

These are some of the findings of the Econsultancy Search Engine Marketing Benchmark Report 2010, sponsored by Guava, which is based on a survey of more than 500 client-side digital marketers and agencies.

Here are a few highlights from the report: 

Increased SEO and PPC spending

Almost half of UK companies (49%) are now spending at least £50,000 a year on paid search marketing, up from 45% last year and 39% in 2008, while there has been a significant decrease in the proportion of responding companies who spend less than £5,000 a year on paid search, from 25% last year to 14% this year.

At the other end of the spectrum 13% of companies are now spending at least £1m a year on paid search, up from 8% last year.

SEO spending has experienced similar increases; the proportion of companies spending at least £50,000 a year on SEO has climbed slightly from 20% last year to 22% this year. The equivalent figure in 2008 was 16%.

Companies are also planning to increase spend next year; the percentage of firms planning to raise PPC budgets is up from 45% to 52%, while the proportion of companies planning to increase SEO spending over the next 12 months has increased from 55% in 2009 to 60%. 

Barriers to success

Despite the increased levels of spending on PPC and SEO, there are still issues which make companies' search marketing efforts less successful than they could be. 

In the case of paid search, the biggest barrier cited by 41% of company respondents was a lack of internal resources, followed by poorly converting websites (30%). Agency respondents had a different view on the issue though, with 49% blaming lack of budget, and 44% poorly converting websites.

For SEO, lack of internal resources is a problem for 49% company respondents, up from 44% in last year's survey. Next on the list is lack of budget (26%). Agencies, meanwhile, cite lack of budget (46%) and not enough internal buy-in (41%) as the key issues. 

Search engines used for PPC campaigns

Not surprisingly, the vast majority of companies (83%) are paying to advertise on Google, though this has fallen 2% since last year's report. 

Search engines used for PPC by company respondents: 

The use of Yahoo has declined sharply, from 44% last year and 49% in 2008 to just 36% this year. Meanwhile, use of Bing has increased by 4%, with 34% of companies using Microsoft's search engine for PPC campaigns. 

The agency figures show a bigger market share for Google, with 93% of supply-side respondents saying their clients use Google for paid search, 48% saying their clients use Yahoo and 47% Bing for paid search.

Social media marketing 

Spending on social media marketing is still relatively modest compared to SEO and PPC. More than half of companies (57%) are spending less than £5,000 annually on this channel.

However, 65% of companies are planning to increase their spending on social media marketing over the next 12 months, an increase from 48% in 2009.

56% are planning to boost social media budgets by more than 20%, while 15% are planning to increase their social media spending by more than 100%, despite the fact that 64% say they can’t measure ROI from social media marketing as effectively as they would like. 

Graham Charlton

Published 7 June, 2010 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

2565 more posts from this author

Comments (4)

Henry Elliss

Henry Elliss, Digital Marketing Director at Tamar

The social media part is particularly interesting (and slightly depressing!) - not really surprising that "15% are planning to increase their social media spending by more than 100%" when the average is under £5k per year - frankly, I'd expect some big brands to be spending ten times that by the end of the year. 

Another great report, guys.

over 6 years ago

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Alex Howland

Really good article and some very useful information in the report. As an agency It is certainly encouraging that companies are spending more on their online marketing. What it will ultimately determine is even more expenditure as companies in the same markets both push their SEO and PPC budgets. In regards to natural search as more people work on promoting the same terms the work required to move clients up positions will naturally get harder with more and more companies actively working on the same terms. Whilst this can be avoided up to a point by diversifying into new keywords and building on other terms competitors have not considered, the bottom line will be an overall increase in costs. For PPC this will be even more relevant. Current costs have risen significantly since only a couple of years ago and with more and more competition and higher bids this will reach even higher levels. Eventually this will reach an equilibrium as companies notice their ROI becoming unmanageable at the higher average cost per clicks and start to pull out. In the meantime though if people run on certain keywords at a loss in order to gain market share this will undoubtedly push people out of the market. It will certainly be interesting how quickly the search landscape will be affected by this rise in company spend.

over 6 years ago

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Clive Hawkins

Some interesting stats here and notable how companies see a big barrier as poorly converting websites, which then reflects in lack of budgets for the agency. If you can sort out the first, the second should improve! This is where more focus needs to be placed as paid advertising becomes more expensive with new entrants and higher average CPCs, getting back to the direct marketing principles of continual testing and improvement.

over 6 years ago

John Courtney

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

If anything this under estimates the growth we are seeing in the market, both for PPC and in particular for our Pay-Per-Results SEO. The graph is clearly labelled as PPC but it should be clear that +/- 90% of all SEO traffic comes from Google in the UK, way more than in USA and vastly higher than the PPC share.

over 6 years ago

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