StatsAd Industry MetricsSEM Sees Optimization PPC

SEM Sees Optimization PPC

Search engine optimization spending has grown over the past year. Expectations are the growth will continue.

Search engine marketers tell all in a recent survey conducted by MarketingSherpa. Results recognize a significant lift in pay-per-click campaigns and a slight increase in the search optimization arena.

MarketingSherpa cites Merrill Lynch data that the U.S. total SEO spending rose 177 percent over the last 12 months. The study projects the growth will continue, but at a slower pace.

Pay-per-click campaigns lifted from 34 percent of marketers reporting results to be “very good” in 2004 to 43 percent now calling their campaigns “very effective.” Search engine optimization (SEO) campaigns only climbed two points, from a 31 percent success rating to 33 percent. Both strategies fared better than email marketing, which reported a 25 percent “very effective” campaign rate, and affiliate marketing, which garnered 22 percent effectiveness.

SEM Increases Over the Next 12 Months (%)
SEO Big Increase PPC Big Increase
B2B marketers 23 20
B2C marketers 29 22
SEO Small Increase PPC Small Increase
B2B marketers 36 36
B2C marketers 35 43
Source: MarketingSherpa, September 2005

Marketers reported committing a significant chunk of their budgets to online spending. B2C marketers allocate 56 percent of the annual budget to online, while B2B pros spend 40 percent. While about 30 percent of marketers expect to maintain the same spending levels in the coming year, about five percent said they plan to decrease SEO spending. Paid search took a hit; 12 percent of B2B and eight percent of B2C marketers say they plan to cut their pay-per-click budget despite recent reports paid search will outpace other forms of online advertising over the next five years.

While PPC budgets may drop, MarketingSherpa finds an overall increase in keyword volume for PPC campaigns. A baseline in September 2004 registered 9,100 keywords per month. In March of this year, the number increased to 14,700; in September marketers will run as many as 17,314 keywords in current campaigns.

Click and Conversion Measurements for B2B and B2C Marketers, 2004 and 2005
2004 2005
PPC CTR (%) 3.0 2.6
Google CPC ($) 1.29 1.61
Conversion PPC (%) 6.6 3.6
Conversion SEO (%) 6.1 4.2
MarketingSherpa, September 2005

Results from SEO campaigns vary between in-house and agency management. Six months after undergoing search optimization, agency-optimized site traffic increased 110 percent to in-house optimized sites that saw a 38 percent increase. MarketingSherpa noted better results from seasoned agencies than from newer firms.

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