$4 Billion Spent on Search Engine Marketing in 2004

According to the latest SEMPO research, the increase in 2005 expenditure will be 40% more than this year's investments in search engine marketing.

The Search Engine Marketing Professional Organization (SEMPO), a non-profit professional association working to increase awareness and promote the value of Search Engine Marketing (SEM) worldwide, recently published research entitled "The State of Search Engine Marketing 2004". This concludes that in the U.S. and Canadian market, advertisers will spend $4.087 billion dollars this year on search marketing programs.

The document shows that the numbers are comprised of payments to search engines, search-related media companies, search engine marketing agencies and in-house expenditures in support of such programs. This includes "paid placement," "paid inclusion," "organic search engine optimization" and "search engine marketing technology platforms".

"The data indicates that current size of the market for Search Engine Marketing services is the tip of the iceberg; we have the beginnings of a healthy industry," said Kevin Lee, Board of Directors Member and Chair of the Research Committee of SEMPO.

Kevin's comments don't seem to be ungrounded, provided that the numbers are relevant to the continuous growth in the SEM industry over the last years.

The research is conducted by Executive Summary Consulting, Inc. and is based on an extensive survey of 288 search engine advertisers and marketing agencies. The survey includes the results of the in-depth interviews with 30 leading industry experts.

The report also estimates that marketers will spend $3.342 billion on paid placement campaigns; $492 million on organic search engine optimization; $182 million on paid inclusion, and $72 million on SEM-related technology services.

The numbers about the return on investment of SEM paid placement advertising continues to stay ahead of price inflation: advertisers said on average they have witnessed bid prices rise 26% in the last 12 months for keywords they commonly buy. 41% of advertisers reported that SEM budgets were newly created funds for this purpose. 50% of advertiser respondents said that their senior executive staff considered the company's search marketing initiatives a "high priority".

According to the report, the large advertisers were likely to outsource more of those budgets, but a minority of their spending is still used for both organic SEO and paid placement.