Search Marketing to Grow

Search-engine marketing continues to grow, according to a survey released this month by the Search Engine Marketing Professional Organization (SEMPO) and Econsultancy, with money often being shifted from other kinds of marketing in order to fund it. But the survey’s respondents (professionals in this field) say measurement of return on investment continues to be the foremost challenge for search.

Conducted online in January and February, the survey was promoted to members of SEMPO and of Econsultancy, the latter a digital publishing and training group with a broad membership among Internet professionals. Nearly 1,500 respondents participated, of whom about two-thirds were on the supplier side, including various sorts of agencies (digital shops, search specialists, general agencies, etc.) and consultancies.

Fifty percent of respondents on the client side said they expect their own company to spend more on paid search this year than last. On average, these respondents foresee their companies’ spending on paid search increasing 37 percent this year. As for search-engine optimization (SEO), 52 percent of client respondents expect their companies to boost spending, with expenditures seen rising an average of 43 percent vs. 2009. The report of the findings estimates that revenues for the search-engine-marketing industry as a whole will grow 14 percent this year, to $16.6 billion.

With many small firms providing search services of one sort or another, the amount of billings each of them takes in can be pretty small. In paid search, 41 percent of agency/consultancy respondents expect their own firm’s billings to be under $100,000 this year. In SEO, 47 percent expect billings this year under that threshold.

Moreover, client companies handle much of their search efforts on their own. In paid search, for example, 47 percent of client-side respondents said they “primarily” handle the work in-house. Fourteen percent use a “paid-search specialist,” 14 percent a “search agency,” 8 percent a “digital marketing agency,” 6 percent an “advertising agency,” 5 percent an “SEO specialist,” 3 percent a Web-design agency,” 1 percent a “PR agency,” 1 percent a “social-media specialist” and 1 percent “other.” The pattern was similar with respect to SEO work, with 51 percent of client-side respondents saying this is handled primarily in-house. Just 2 percent said their SEO work is primarily handled by the general category of “advertising agency.”

Does the fact that general agencies conduct so little of client respondents’ search work mean search is at risk of being isolated from (rather than closely coordinated with) a company’s overall marketing program? “Hopefully, all of a client’s agencies are talking together,” says Sara Holoubek, president of SEMPO and CEO of her own strategic consultancy, Luminary Labs. “Obviously, the marketing works better if they all play nicely in the sandbox together.” She acknowledges, though, that this is not always the reality.

And why do the general agencies cede much of the search work to specialized agencies and consultancies? Holoubek sees this as a legacy of the period in which big agencies and holding companies treated search “as an afterthought. That’s why you see such a diverse collection of companies on the supply side,” even though the big agencies have more recently taken steps to get up to speed (or to buy specialist shops) in this field. For that matter, she says, “Some clients may want a very, very specialized, dedicated provider” when it comes to conducting their search efforts.

In this period of severely constrained budgets, where are clients finding the money to fund their search efforts? In paid search, 30 percent of client respondents said it’s “newly allocated budget specifically for paid search,” while 25 percent said it’s “money shifted away from other marketing budgets” and 45 percent that it’s a combination of the two. For SEO, 39 percent said it’s new money, 19 percent said it’s money shifted from other marketing budgets, 9 percent said it’s “money shifted from other Web site programs” and 33 percent said it’s a combination of these.