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.