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2007 - Online Ad Spending to Total $19.5 Billion in 2007

2006 - Search Engine Marketing Is a Rocket: Spending Is Up 62%; Advertisers Spent. Total of $9.4 Billion in 2006, according to SEMPO Survey of SEM Industry

Direct sales ROI and expanding small business market are two main factors driving SEM growth.

WAKEFIELD, MA - February 8, 2007

North American advertisers spent $9.4 billion on Search Engine Marketing (SEM) in 2006, a 62 percent increase over 2005 spending, according to an annual industry survey conducted by the Search Engine Marketing Professional Organization (SEMPO)www.sempo.org. SEMPO researchers also estimate SEM spending to double by 2011, at an aggregate spending total of $18.6 billion.

The report, "The State of Search Engine Marketing 2006," collected data on spending trends by agencies and in-house advertisers. The SEM programs surveyed include paid placement, paid inclusion, organic search engine optimization (SEO) and SEM technology platforms. The report is based on an industrywide survey of 587 respondents - both agency and in-house advertisers - conducted in November and December 2006 by Radar Research, LLC and Intellisurvey.

"These spending figures show that 2006 was a watershed year for the SEM industry".Read full report

Spending Trends

SEMPO's survey found organic SEO (tactics for improving a website's non-advertising rank in search engines) is still the most popular form of SEM, with almost three-quarters of advertisers using this method, with paid placement a very close second at 71 percent. However, in dollars, paid placement accounted for 86 percent of total spending, or $8 billion. Organic SEO accounted for $1.1 billion in spending, or 12 percent. Paid inclusion continues its decline, accounting for one percent of total spending, or $94 million. SEM technology platforms account for the remainder, at 1.3 percent, or $122 million in spending. Read full report

MSN Gaining on Competition

The SEMPO survey also found that MSN is gaining on Google and Yahoo!, now ranking third in paid placement SEM. In one year, MSN has made tremendous progress: in 2005 only 29 percent of respondents said they were using MSN; in 2006 that number rose to 68 percent.

Google AdWords continues its reign as most popular search advertising program, used by 96 percent of respondents. Yahoo registered 86 percent of respondents saying they used the program.

In other trends:

  • 75% of advertisers said they could afford a mild increase in paid placement; the remaining 25% say they have topped out in cost per lead spending 
  • SEM continues to poach budget from other marketing channels, especially offline marketing programs 
  • In-house marketing programs continue to grow, portending further consolidation on the agency side of the business Read full report

Canadian Spending on Search Marketing

IAB Canada reported that online ad spending in Canada hit CAD$1.01 billion in 2006, up 80% over 2005, with a projection of 32% growth in 2007, to reach $1.33 billion in sales. Broken down by category, online classifieds and directories had the biggest growth in '06, rising 120%, while email advertising was up 82%, paid search rose 79% and display ads were up 58%.

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