Search marketing growth takes toll on print spending

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While print seems to be the big loser in terms of its share of the ad spending pie, search engine marketing will continue to enjoy robust growth, according to the Search Engine Marketing Professional Organization's annual survey of agencies and advertisers.

"Small and midsize businesses are using search in place of newspaper and magazine advertising," said Marissa Gluck, managing partner at Radar Research, which conducted the online survey of 867 search-engine advertisers and agencies in December and January. "We're seeing a definite shift from print. That's because [search is] efficient, and [advertisers] understand what they are getting for their money."

Thirty-two percent of marketers said they are spending less on print magazine ads in favor of search; 22% are shifting dollars away from Web site development; and 17% said they are raiding direct mail budgets to reallocate cash toward search efforts.

"Despite all the economic indicators, we don't see search running the same risk of compression as traditional advertising because search is considered a performance method," said Dana Todd, chairwoman of SEMPO and CMO of Newsforce, a marketer of press release optimization technology.

Gluck said search's edge is attributable to its efficiency and easy-to-track ROI. "Advertisers are really looking for efficiency and they want to mitigate risk; and search engine marketing fulfills both of those because you only pay for those [online users] who click."

The North American search marketing industry grew overall from $9.4 billion in 2006 to $12.2 billion last year, exceeding SEMPO's earlier projections of $11.5 billion.

This year, it predicts spending will reach $15.7 billion.

An overwhelming majority of dollars spent in 2007 (87.4%) was captured by paid placement, while organic SEO garnered 10.5%. Technology investment nabbed 1.4% of spending, and paid inclusion, 0.07%.

Nine of 10 advertisers (89%) said they use SEO. More than half (56%) said they expected to spend more on organic search this year compared with last year. The study also found 54% of advertisers will manage organic SEO entirely in-house this year rather than outsourcing it to agencies, while 43% plan to outsource pieces. Only 4% indicated they would outsource all SEO to a search agency. (Due to rounding, percentages total more than 100%).

Fifty percent of advertisers said they will manage paid placement advertising using in-house resources; 39% said they will use a mix of agency and in-house resources; and 13% said they would outsource all of it to an SEM agency.

Behavioral targeting was also cited by advertisers as an area of interest. Four out of five advertisers (80%) indicated they were willing to bid more for behavioral targeting opportunities within search.

"In the online advertising space, behavioral ad targeting will get a higher share of experimental ad dollars this year than any other tactic we've seen, including mobile and video," Todd said.

She said "companies like Yahoo will allow you to bundle search and display advertising. You are following them with a banner ad after they've searched on a specific keyword. It's a second chance to target them."

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