Search Marketers Spent $9.4 Billion in 2006

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SEMPO, the Search Engine Marketing Professionals Organization, has released the results from its annual "State of Search Engine Marketing 2006" report.

North American advertisers spent $9.4 billion on search engine marketing (SEM) in 2006, up 63 percent over the $5.75 billion spent on search in 2005, and beating last year's estimate of $7.2 billion. Spending is now projected to grow to $18.6 billion by 2011 in North America.

Out of the total 2006 spend, $8 billion, or 86 percent, went to paid search; and $1.1 billion, or 12 percent of overall spending, went to search engine optimization (SEO). Spending on SEM technologies, including leasing, agency solutions and in-house development, accounts for 1.3 percent of overall spending, or $122 million; and paid inclusion accounted for 1.0 percent of spending, or $94 million.

The spending does not correlate with adoption in each case, since most companies tend to spend decidedly less on their SEO efforts, but are committed to engaging in SEO at some level. More than 76 percent of respondents take part in organic SEO activities, and 71 percent do paid search. Participation in paid inclusion is waning, with less than 20 percent of respondents taking part, compared to 40 percent in 2005.

More than a third of advertisers (36 percent) report their funding for paid placement programs and organic SEO came from newly created budgets in 2006. The good news for search marketers is that search marketing is now poaching budget from offline marketing channels, instead of fighting for a share of the much smaller online budgets. Hardest hit was print magazine advertising, with 20 percent of respondents reporting a shift; followed by direct mail at 16 percent; TV advertising at 13 percent; and print newspaper advertising at 13 percent.

Search is not a threat to these offline media just yet, but if it continues on the current trend, it won't be long before offline media companies take notice.

The industry-wide survey of 587 respondents was conducted by Radar Research and Intellisurvey in November and December 2006. We take a deeper look at the report on our sister site, Search Engine Watch, in today's SearchDay, "Search Marketing Shows Strength in 2006."

Another report on the search industry, currently being conducted by JupiterResearch and the ClickZ Network, is collecting data until Friday, February 9. All search marketers are invited to participate in this short, 25-question survey, in exchange for a copy of the aggregated survey results, and a chance to win a $50 gift certificate from Amazon.com.