Despite the medium's direct marketing reputation, advertisers are hoping to achieve branding results.
A surprising 61 percent of search engine marketers use paid placement to enhance brand awareness, according to a survey by the Search Engine Marketing Professional Organization (SEMPO). The study found more marketers interested in brand impact than were interested in selling products, generating leads or driving traffic, although those were also considered important objectives.
The results come from SEMPO's "The State of Search Engine Marketing 2004" research, conducted by Executive Summary Consulting. The research was released to SEMPO members Monday night at the organization's meeting at the Search Engine Strategies conference in Chicago.
The survey of 288 search marketers found the industry will spend $4 billion on both paid and organic search in 2004, including in-house and outsourced expenditures. By contrast, a recent JupiterResearch study said paid search would account for $2.6 billion in spending in 2004.
"The focus of a lot of the existing research has been about the paid search part of it. Organic optimization is an important part of the industry," said Rick Bruner, who conducted the research as president of Executive Summary Consulting before joining DoubleClick's research department recently.
Though search engine marketing has long been considered a direct marketing medium -- most suitable for generating sales and leads -- Bruner said paid search's branding value was top of mind for respondents. Sixty-one percent of respondents said they were using SEM to increase brand awareness, while 58 percent said they wanted to sell products or content directly online. Next in line was lead generation, with 54 percent saying they aimed to generate leads that they could close themselves via another sales channel.
"I don't want to overhype that point because selling over the Internet and generating leads were right behind it [branding]. It was a photo finish for those results," he said. "Some big agencies and search engines have heard something along those lines already. There's a lot of complexity in the way people use search. They do multiple searches before making a decision and buying something. Maybe getting in that consideration set in the first place is kind of a branding opportunity."
Contrary to what's been reported in other research, the SEMPO study found that most advertisers plan to handle the majority of their search marketing in-house rather than outsourcing it to an agency. Fifty-two percent of advertisers said they would handle all of their 2005 spending in-house. Larger advertisers were more likely, however, to outsource more of their budgets. A recent JupiterResearch report said that only a third of search marketers used an agency, but, because larger marketers tended to outsource, agencies control more than half of search marketing spend.
"I think the reason why we reached different findings was that we phrased the question differently," said Bruner. "I think what they asked was 'are you planning to outsource or not?'.... We asked people what percentage of overall spending they were going to outsource."
Though the research found that the soaring cost of paid listings was a concern -- on average, advertisers said they'd seen bid prices rise 26 percent in the past year -- marketers can still spend 33 percent more and still achieve a positive return on investment. The study found that click fraud, which has been getting a lot of attention in the press, was less of a concern than shady SEO practices, which many thought were damaging the industry.
Rather than creating new budget line items for search marketing, the research found that companies are siphoning off money that had been earmarked for traditional or Internet marketing. The biggest budget losers were shopping search listings (13 percent), email programs (9 percent), Web display advertising (9 percent) and print magazine (9 percent) and newspaper ads (9 percent).
Next year, advertisers plan to spend, on average, 39 percent more on all types of search engine marketing than they did in 2004.
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Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.
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