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Advertisers
will spend $4 billion in 2004 by year-end on search marketing
programs, and are expected to spend 39 percent
more on such programs in 2005, according to the Search Engine
Marketing Professional Organization (SEMPO).
SEMPO, a non-profit professional organization that promotes
search engine marketing, issued a report today that suggests
the robust market for search services will continue. The report,
"The State of Search Engine Marketing 2004" covers
U.S. and Canadian markets and has a number of illuminating
observations.
The $4 billion figure includes payments to search engines
and search-related media companies, search engine marketing
agencies, as well as in-house expenditures in support of such
programs, including "paid placement," "paid
inclusion," "organic search engine optimization,"
and "search engine marketing technology platforms."
SEMPO notes a few of the report's highlights:
* The return on investment of SEM paid placement advertising
continues to stay ahead of price inflation: advertisers said
on average they have seen bid prices rise 26 percent in the
last 12 months for keywords they commonly buy but said they
could stand on average another 33 percent increase in the
price and still make a profitable transaction.
* Only 41 percent of advertisers reported that SEM budgets
were newly created funds for this purpose; the rest said SEM
budgets were coming in whole or in part from shifts away from
traditional or Internet marketing programs. The biggest shift
in terms of share of budget was transferred from paid listings
on shopping directories, e-mail programs, Web display advertising,
and print magazine and newspaper ads.
* Brand awareness was the No. 1 objective advertisers set
for search marketing programs.
* Fifty percent of advertiser respondents said that their
senior executive staff considered the company's search marketing
initiatives a "high priority" (although that figure
dropped to 32 percent of companies with staff sizes larger
than 500).
* Advertisers expect to spend, on average, 39 percent more
on all search marketing programs (organic search engine optimization,
paid placement, paid inclusion, and SEM technology) in 2005
compared to 2004; smaller firms projected 32 percent more,
while larger firms (larger than 500 employees) projected a
43 percent year-over-year increase. SEM agencies projected
a bullish budget, with overall gross revenue increases for
2005 of 79 percent on average.
A summary copy of the report is also publicly available here
on SEMPO's Web site.
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