$10 Bil. Spent on Search Ads

NEW YORK Advertisers in North America spent close to $10 billion on search engine marketing in 2006, a year that saw a 62 percent spending increase versus 2005, according to an annual survey conducted by the Search Engine Marketing Professional Organization (Sempo).

Sempo found, based on its survey of 587 search agencies and advertisers, spending in the medium will almost double by 2011, reaching $18.5 billion (Sempo counts both paid search advertising and spending on companies’ internal search engine optimization in its estimates). According to the report, that rapid growth will be driven by continued advertiser demand, rising prices and a new wave of small-to-midsize businesses discovering the medium.

Not surprisingly, Google dominates the search advertising business. Among the marketers and agencies surveyed, 96 percent reported using Google AdWords to promote their brands.

Despite its recent urgent push to improve its own search ad technology, Yahoo is on solid footing, according to Sempo respondents. More than four out of five advertisers, 86 percent, said they ran ads on Yahoo’s search product.

Meanwhile MSN, which has struggled in a distant third-place position in the search race, even losing some market share in recent months, made some strides among advertisers, per Sempo. Sixty-eight percent of advertisers said they used MSN for their search campaigns in 2006, up from just 30 percent in 2005.

MSN surged despite its low usage because the search engine’s ad environment is less cluttered, and it tends to deliver the right ads to users. “The ROI on MSN is extremely strong,” said Kevin Lee, co-founder of Did-it.com and chair of the Sempo research committee. “And there is not anywhere near the competition, as it’s a less mature marketplace.”

Despite claims that more brands are using the medium for branding, just 21 percent of search advertisers actually track or measure the branding impact of search for their campaigns, said Sempo.

Lee said that in practice, more brands are looking at a combination of search and traditional branding parameters. “A lot of search marketers are being more holistic,” he said.