Hitmetrix - User behavior analytics & recording

SEMPO cuts US search spend estimates by over $2 billion

The Search Engine Marketing Professional Organization (SEMPO) estimates that search engine marketing (SEM) will total $13.5 billion for 2008. This number is down from an estimate of $15.7 billion made early last year, according to SEMPO’s yearly State of Search Engine Marketing study.

SEMPO projects that 88% of the $13.5 billion is being spent on paid search advertisements, 11% on natural search engine optimization (SEO) and 1% on SEM technologies including leasing, agency solutions and in-house development, according to the study, conducted by Radar Research.

SEMPO is now predicting that search spend will reach $14.7 billion in 2009 (down from last year’s prediction of $18.8 billion) and it will hit $19.8 billion in 2011 ($25.2 million was last year’s estimate).

Board member of SEMPO Kevin Lee, who is also chairman, CEO and co-founder of search agency Didit attributes the change to the macroeconomic situation. “In this economy where there’s lower consumer confidence, less disposable income and job loss, in many sectors people aren’t buying so they’re not searching as much,” he said, “Inventory is down and the pie has shrunk.”

The second reason he cites is budget cuts. “Even though search is trackable and should be last thing you cut, some don’t look at it that way,” Lee explained, “some equally cut from all channels when they’re cutting budget.”

The organization also found in its survey of 890 industry pros that 98% of them are running search campaigns with Google’s AdWords. Only 68% are currently running campaigns on Yahoo (down from 86% in 2006), and 54% are running ads on Microsoft’s Live Search.

Lee said one of those most surprising finds of the study was that increased brand awareness surpassed direct sales in terms of primary objectives of SEM spend–63% and 61% respectively.

A bit less surprising, search marketers also reported that they are more cautious about their spending in 2009 than in previous years. Just over half of advertisers report they’ll increase spending in 2009; last year two-thirds of respondents made that assertion.

And, it seems advertisers are more happy with their agencies’ performance this year than last. Last year, 42% said they were happy with their agencies; that number rose to 54% this year. 

 “In sectors where click volume has shrunk, brands have to determine how badly they want a slice of the pie in both organic and paid,” Lee said, “They should continue to reevaluate their overall budgets within the core elements of search.”

Related Posts
E-Book Popup

Unlock the Secrets of Digital Marketing in 2024!

Subscribe to our newsletter and get your FREE copy of “The Ultimate Guide to Digital Marketing Trends in 2024"