survey of advertisers and agencies search engine marketing professional organization (sempo)...
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Survey of Advertisers and Agencies Search Engine Marketing Professional Organization (SEMPO)
December, 2005Initial Results for SEMPO Member
The State of Search Engine Marketing 2005
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Research Project Objectives
Understand the size of the industry in order to help promote its growth
Understand where marketer spending is going, among different recipients (search engine media companies, SEM agencies, in-house) and towards what types of SEM programs (paid placement, paid inclusion, organic SEO, SEM technology)
Identify key industry trends
Identify key industry issues SEMPO should address
PROJECT OVERVIEW
Radar Research, LLC oversaw the following research initiatives as part of this project:
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
DEFINITIONS: Respondents Were Given the Following Definitions at the Start of the Survey
Search Engine Marketing (SEM): the entire set of techniques and strategies used to direct more visitors from search engines to marketing web sites, including all of the tactics and strategies defined below.
Paid Placement: Text ads targeted to keyword search results on search engines, through programs such as Google AdWords and Yahoo Search "Precision Match," also sometimes referred to as "Paid Placement," "Pay-per-Click" (PPC) advertising and Cost-per-Click (CPC) advertising.
Contextually Targeted Text Ads: Text ads targeted to the subject of writings on web pages, such as news articles and weblogs, using programs such as Google's "AdSense" and Yahoo Search’s "Content Match" programs.
Paid Inclusion: The practice of paying a fee (fee structures may vary) to search engines and similar types of sites (e.g., directories, shopping comparison sites) so that a given web site or web pages may be included in the service's directory, although not necessarily in exchange for a particular position in search listings, such as Yahoo Search’s "Site Match" program, formerly known as Inktomi)
Organic Search Engine Optimization: The practice of using a range of techniques, including augmenting HTML code, web page copy editing, site navigation, linking campaigns and more, in order to improve how well a site or page gets listed in search engines for particular search topics.
Search Engine Marketing (SEM) Service Provider: Agencies or individuals who assist companies with the various search engine marketing practices described above.
Search Engine Marketing Technology Provider: Makers of a software application specialized to assist in the execution of search engine marketing programs, with features such as "bid management," "campaign management," "portfolio management" and "dynamic optimization."
Web Analytics: Using a reporting platform for measuring and analyzing the results of any/all of your online marketing campaigns, including search engine marketing.
PROJECT OVERVIEW
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Research Methodology
Radar Research oversaw the following research initiatives as part of this project:
PROJECT OVERVIEW
Extensive analysis of secondary research, reporting and commentary
Development of SEM forecast model
Detailed online survey completed by 553 search engine advertisers and SEM agencies, conducted via IntelliSurvey, Inc.
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Key Research Highlights: 2005
SEM was a $5.75 billion industry in North America in 2005, and will grow to $11.1 billion in 2010
Brand awareness is advertisers' top objective for SEM programs, particularly large firms
Organic SEO is the most popular form of SEM, with 4 out of 5 advertisers using this method, with paid placement a close second at 76%
ROI is in line with inflation: Four out of five advertisers say they could afford to pay a mild increase in the price of paid placement, while ¾ of advertisers and all agencies report moderate price hikes this year.
SEM is poaching budget from other marketing channels for the vast majority of advertisers – especially from affiliate marketing and web site development.
Senior executives consider SEM a high business priority with almost half of advertiser respondents (47%) saying that senior management at their companies were "very involved" in SEM programs, especially among companies with fewer than 500 employees
Most advertisers plan to manage the majority of their SEM spending in-house in 2006. SEM agencies will see a significant decline in business as a result.
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Key Research Conclusions
Advertisers and agencies are approaching their pricing limits. While most advertisers felt keyword pricing has risen in the past year, four out of five advertisers claimed they could still afford an increase in keyword pricing in 2006. Less than a quarter claimed they were currently at maximum efficiency. Yet even among advertisers who report the capacity to increase their ad expenditure, the vast majority can only absorb increases of less than 30%.
Most advertisers are relying on both paid and organic search strategies. Although most of the SEM budget is allocated to paid search media, strategic SEO is a high priority. To the extent that the search engines can support the legitimate efforts of marketers to get their sites found when relevant to searchers, there is both an opportunity to capture more revenue and better service those business customers.
SEM agencies will have to prove their worth to advertisers. Two-thirds of advertisers report they intend to manage 100% of their SEM initiatives in-house. While this indicates that advertisers are viewing their SEM holistically, it also implies this is a stop-gap measure as the SEM agency marketplace undergoes consolidation and contraction. Agencies must show demonstrable ROI to clients.
Who responded to this survey?
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Most Respondents Are U.S. Companies
In total 553 respondents completed the survey
North American firms (U.S. and Canada) made up almost three-quarters of all respondents
Respondents from other countries included Argentina, Australia, Belgium, Canada, Costa Rica, France, Germany, Hong Kong, India, Italy, Netherlands, Norway, South Africa, Spain, Sweden
Other22%
UK6%
U .S .65%
C anada7%
Location of Surveyed Companies
"What country is your company located in?"
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Most Advertiser Respondents Have Hands-on SEM Roles
Most advertiser respondents are directly responsible for SEM programs
12% of advertiser respondents are senior managers with little or no hands-on SEM experience but familiarity with and oversight of the programs
4%
19%
3%5%
25%
3%2% 4% 2%14%12%
48%
14% 10%
44%
60%
23%
9%
0%
20%
40%
60%
80%
Sr . ma nage r w ith budgetand s t ra tegy o ve rs ightbut no hands-on SEM
ex per ience
Ma nager ove rs eein g SEM,bu t su bo rd ina tes do most
han ds -on w o rk
Direc tly respon s ible fo rSEM p ro grams
O nly tangen tial SEMre spons iblities
Company is too s ma ll f ors uc h d is tinc tions ; I do it a ll
Oth er
% o
f A
dv
erti
ser
Res
po
nd
ents
A ll A dve rtis ers A d ver tis ers o f <500 Emp lo yees A dv er tise rs of 500+ Employ ee s
Personal Role At Company Regarding Search Engine Marketing Programs
"What is your personal role within your company as regards search engine marketing programs?"
Advertisers n=161
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Vast Majority of Advertiser Respondents Influence Budget Decisions on SEM Programs
Over a third of advertiser respondents have ultimate budget authority for SEM programs, especially at agencies
Well more than half significantly influence budget decisions on SEM, even if someone else has final sign-off responsibility
4% 4 % 2%9%
3 5%
52 %
5%
48 %4 2%
17 %
62 %
19 %
0 %
20 %
40 %
60 %
80 %
I a m th e u ltimate d ec is ion make r on suc h b ud ge t a llo cat ions
I ha ve a s ign if ica nt amo un t o f in f lu enc eo n s uc h s pe nd in g dec is ions , bu t
s ome on e e lse s ign s of f
My op inion c oun ts fo r someth ing , bu tth ere are o the rs w h o h av e mo re
in f lue nc e
My op inion do es no t h old muc h s w ay ins pendin g d ec is ion s like this%
of
Ad
ver
tise
r R
esp
on
den
ts
A ll A d ve rtis ers A d ve rtis ers o f <50 0 Emp loye es A dv er tise rs of 5 00+ Employ ee s
Level of Involvement on Budget Decisions
"What is your level of involvement on budget decisions as pertains to spending on search engine marketing programs?"
Advertisers n=161
What is the size of the SEM industry?
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
2005 U.S. & Canadian SEM Industry Size Estimate, by Tactic
2005 Advertiser SEM Spending Share of Total Share of Tactic
Paid Placement $4,771,061,673 83.0% Search Media Firms $4,257,875,000 74.1% 89.2% SEM Agencies $137,036,561 2.4% 2.9% In-House $376,150,112 6.5% 7.9%
Paid Inclusion $245,775,760 4.3% Search Media Firms $173,729,826 3.0% 70.7% SEM Agencies $11,500,000 0.2% 4.7% In-House $60,545,934 1.1% 24.6%
Organic SEO $642,994,066 11.2% SEM Agencies $163,897,864 2.9% 25.5% In-House $479,096,202 8.3% 74.5%
SEM Tech $90,357,143 1.6% Leasing $32,775,000 0.6% 36.3% SEM Agencies $32,857,143 0.6% 36.4% In-House $24,725,000 0.4% 27.4%
Total $5,750,188,644
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
SEM growth will be driven by both its global reach and improved local services
Time
Growth of SEM revenue
Inventory Limits
N. American market maturity
Maximum adv efficiency
Second wave of SMB using SEM
Greater emphasis on branding value
Growth of niche and local SEM
Global growth
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
SEM Expenditures to Reach $11.1B in 2010
$11.10
$10 .23
$9 .30
$8 .27
$7 .19
$5 .75
$0
$2
$4
$6
$8
$10
$12
2005 2006 2007 2008 2009 2010
(bil
lio
ns)
Growth will be driven by:– Increased emphasis on branding value of search– Second wave of small-to-mid size businesses using search– Growth of niche and local search– Increase in broadband users– Rising cost per click
Search Engine Marketing Projections, North America 2005-2010
Source: Radar Research Forecast, North America, 12/05
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Google, Overture Most Popular Search Media Companies
Google AdWords is the most popular search advertising program, used by 95% of respondents
59% reported using Yahoo’s general "Precision Match" paid placement program
An equal number of respondents (46%)said they used each leader's contextual advertising programs (Google AdSense and Yahoo’s Content Match)
MIVA (formerly FindWhat) was the next most-popular search ad program, followed by AskJeeves, Business.com, Looksmart, and Kanoondle3%
4%
5%
6%
6%
14%
13%
15%
15%
24%
28%
29%
38%
46%
46%
59%
95%
1%
18%
2%
Other
goClick
ePilot
7Search
Lycos Insite Adbuyer
Search123
Mamma
Enhance
Kanoodle
LookSmart
Business
Yahoo! Search Local Match
AskJeeves
MIVA
MSN
Yahoo! Search Site Match (paid inclusion)
Yahoo! Search Content Match
Google AdSense
Yahoo! Search Precision Match
Google AdWords
% of Advertiser Respondents
Most Popular Paid Placement Search Engine Networks Among Advertisers
"Which of the following Paid Placement search engine networks do you run campaigns on?" [Multiple responses applicable]
Advertisers n=123
Advertisers
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Brand, Sales, Leads and Traffic Are Top Objects of Paid Placement Programs Among Advertisers Among advertisers, enhancing brand awareness is the top objective of Paid Placement campaigns (albeit by a narrow
margin)
Selling products follows closely as an objective for Paid Placement, especially among smaller firms
Larger firms are more interested in driving leads and traffic via Paid Placement than smaller firms
11 %3 %
3 6%
13% 9 %4%
4 0%
1 7%1 9%
3 7%
5 8%62 % 6 0%
5 4%6 5%
55%
2 %
32 %
77 %
4 9%
70 %
0%
2 0%
4 0%
6 0%
8 0%
To inc re as e /en ha nc e b ra nd
aw a re ne ss of ou rprod uc ts /s erv ic es
To se ll prod uc ts ,se rv ice s o r con te nt
direc t ly o nline
To g en erate lea dsth at w e o urse lves w ill
c lo se as sa les v iaa no the r c ha nn el
To dr iv e t ra f f ic to o urw eb s ite , th e rev en ue
mo de l of w hic h iso nline ad ver tis in g
To g en erate lea ds fo ra d eale r of dis trib uto rne tw ork to c lo se as
sa les
To prov id ein fo rmation al /
ed uca tion al c on ten ton ly
Oth er
% o
f A
dv
erti
ser
Res
po
nd
en
ts
A ll A d ve rtis ers A d ve rtis ers o f <5 00 Emp loye es A dv er tise rs of 5 00 + Emplo yee s
Purpose of Search Engine Marketing Use
"What is your company using search engine marketing to accomplish?" [Multiple responses applicable]
Advertisers n=161
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Site Traffic, Conversion Rate, Click-Thru and ROI are Top Performance Metrics for SEM Programs
ALL RESPONDENTS > GENERAL More than 50% of respondents tracked the following success metrics for the SEM campaigns: site traffic, post-
click conversion, click-thru rate, ROI, cost-per-click, cost-per-action (e.g., sale), and total number of conversions
Agencies were more likely to track all metrics by about a margin of 10% in the case of all metrics
Metrics Tracked To Gauge the Success of SEM Programs
"What metrics do you track / measure / generally pay attention to gauge the success of Search Engine Marketing programs?"
54% 52%47%55%
76%80%
69%62% 60%
39% 41%
71%65%
57% 62%70%74%
80%85%
63%57%
0%10%20%30%40%50%60%70%80%90%
100%
Increased traff icvolume
Conversion rate Click-thru rate Return on Investment Cost per click CPA Total number of onlinesales
% o
f A
dve
rtis
er R
esp
on
den
ts
Total Advertisers Agencies
Total n=553
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Senior Executives Appreciate the Value of SEM
Almost half of all advertiser respondents said that senior management at their companies were "very involved" in SEM programs and considered them "a high priority," especially among companies with fewer than 500 employees
Another 37% said senior execs were "moderately aware and interested" in SEM programs; almost half of larger firms agreed with this statement
4%
3 2%
4 9%
9 % 11%6 %9 %
47 %
3 7%
1 0%
33 %
54 %
0%
1 0%
2 0%
3 0%
4 0%
5 0%
6 0%
7 0%
V ery in vo lved ; th ey co ns ider it a high p rior ity
Mo de ra tely aw a re a nd inte re s te d Dimly aw a re a nd inte re s te d a t b es t No t at all
% o
f A
dv
erti
ser
Res
po
nd
ents
A ll A dve r tisers A d ver tis ers o f <50 0 Emp lo ye es A d ve rtis ers o f 50 0+ Emp loye es
Extent of Senior Management’s Interest in SEM Practices
"To what extent is your senior management interested in and aware of Search Engine Marketing practices your company engages in?"
RESEARCH HIGHLIGHTS
Advertisers n=168
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Organic SEO Most Popular of SEM Programs With Advertiser Respondents
76%80%
40%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
O rganic S E O P aid P lac em ent P aid Inc lus ion
% o
f A
dve
rtis
er R
esp
on
den
ts
Engagement in SEM Programs
"Do you currently engage in …?" Eight out of 10 advertiser respondents engage in organic search engine optimization
Three quarters engage in paid placement
Less than half engage in paid inclusion
Pricing Trends
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Majority of Respondents Shift Budget Away From Other Marketing Programs for Paid SEM Programs
Only 27% of respondents said their funding for paid placement and paid inclusion programs came from newly created budgets, a significant drop from 2004, indicating a growing maturity among advertisers
Most respondents said they were shifting in whole or in part budgets from other marketing programs to fund these new initiatives
1 4%
2 8% 2 8%
38 %
6%12 %
40 %
2 7%22%
4 0%
19 %
2 6%
0 %
10 %
20 %
30 %
40 %
50 %
It is new ly allo cated bu dge ts pec if ic ally f or th es e SEM
p ro grams
It is mo ne y s hif ted aw a yfrom th e b udg ets o f ex is ting
ma rke ting prog ra ms
A c ombina tion of ne w f un dsa nd fu nd s s hif ted f ro m ex is tin g
marketin g p ro grams
Not app lic ab le; w e d o n ote nga ge in the se tw o typ es
o f prog ra ms
% o
f A
dv
erti
ser
Res
po
nd
ents
A ll A dv er tise rs A d ve rtis ers o f <5 00 Emp loy ees A d ve rt is ers of 50 0+ Employ ee s
Source of Budget for Paid Placement and Paid Inclusion Programs
"Where is the budget coming from for your Paid Placement and Paid Inclusion programs?"
Advertisers n=161
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Majority of Respondents Shift Budget Away From Other Marketing Programs for Organic SEO Only 30% of respondents said their funding for organic search engine optimization programs came from
newly created budgets, again dropping from last year
Most respondents said they were shifting in whole or in part budgets from other marketing programs and/or web development budgets to fund these new initiatives
4%
9%13%
10%
2%
11%
28%
17%21%
11%9%
11%
4%9%
12%16%
30%
19%14%
19%
31%
0%
10%
20%
30%
40%
50%
It is new ly allo catedbudget spec if ica lly
fo r these SEMpro grams
A combinatio n o f new f unds an d
fund s s hif ted f rom ex is ting marketing
budgets
It is mone y s hif tedaw ay f rom th e
budge ts of ex is tingmarke ting prog rams
A combinatio n o f new
f un ds , p lus budge tsshif ted f rom ex is ting marketing and f rom
w e b s ite devprog rams
A c omb ina tion of newf un ds and f un ds
shif ted f rom ex is t ingw eb s ite deve lopmen t
budge ts
It is mone y shif ted aw a y f rom bud ge tsof e x is t ing w eb s ite
deve lopment prog rams
No t applicable ; w e dono t eng age in Organ ic
Sea rc h Eng ine Op timiza tion
p ro grams
% o
f A
dv
erti
ser
Res
po
nd
ents
A ll A dv er tise rs A dve rt isers of <5 00 Employ ees A dv er tise rs of 5 00+ Employ ees
Source of Budget for Organic Search Optimization Programs
"Where is the budget coming from for your Organic Search Optimization programs?"
RESEARCH HIGHLIGHTS
Advertisers n=161
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
SEM Is Poaching Budget From Established Marketing Program
The biggest shares of budgets for SEM programs are being shifted away from web development, affiliate marketing, email marketing, yellow pages, TV and direct mail.
Shift of Marketing / IT Funds to Search Marketing Programs
"From which marketing/IT programs are you shifting budget away and moving it to your search marketing programs?"
RESEARCH HIGHLIGHTS
Advertisers n=28
50%
4%
4%
4%
4%
4%
4%
4%
4%
7%
7%
7%
7%
11%
11%
0% 20% 40% 60%
Other
Point-of-sale promotions
Conferences and exhibitions
Telemarketing
Coupons
Online yellow page advertising
Web graphical display advertising
Print magazines advertising
Print newspaper advertising
TV advertising
Direct mail
Email marketing
Print yellow page advertising
Web site development
Affiliate Marketing
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Paid Placement Prices Have Risen Moderately
Changes in Paid Placement Prices Compared to Last Year
"Have you observed prices for Paid Placement ads change in the last year for the keywords you routinely bid on?"
Advertisers n=123; Agencies n=229
23%
15%
20%
15%
10%
7%
4%
0% 0% 0%
6%
0%0%
25%
32%
26%
6%7%
1%0%
1%0%
3%1%
0%
5%
10%
15%
20%
25%
30%
35%
Don'tknow
10%more
20%more
30%more
40%more
50%more
60%more
70%more
80%more
90%more
Twiceas much
Morethantwice
Advertisers
Agencies
Advertisers and agencies are experiencing similar trends in overall pricing
Over three-quarters of advertiser respondents felt that prices for their common keywords rose in the past 12 months; 100% of agencies thought prices went up
Nearly a quarter of advertisers do not know whether they are paying more for paid placement in 2005 versus the previous year
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Faced With Escalating Keyword Prices, Advertisers Would Increase Program Efficiency
0%1 0%2 0%3 0%4 0%5 0%6 0%7 0%8 0%9 0%
Try toimprov e s ite'sef f ic ien cy atc on ve rtin g *
Try to improv eou r b id mgmt
p ro grams
Shif t mo rebu dg et to
n ic he se archad ne tw orks
Gr in a nd be arit; w e ca n s tillaf fo rd to pa y
mo re
Inc re as e th en umb er o fke yw o rd sw e bid on
De crea seb ud get f or Pa id
Plac ement
Rely more o nmore
s op his t ic ate dsof tw a re
Re ly les s ono uts ide SEM
ag enc ies
Rely more onou ts id e SEM
a ge nc ie s
Sup ple men tc os t f ro m
b ra nd bu dg ets
Ce as e PaidPlac eme ntprog ramsa ltog eth er
% o
f A
dv
erti
ser
Res
po
nd
ents
A ll A dv er tise rs A dv er tise rs of <50 0 Emplo ye es A dve rt is ers of 50 0+ Employ ee s
Reaction to 2-Year Steady Increase in Paid Placement Costs
"How would you likely react to hypothetical scenario where the cost of Paid Placement steadily increased for the next two years?"
Paid placement advertisers would address price rises by improving the efficiency of their programs before cutting back on spending
Improving site conversion efficiency and improving the overall efficiency of bidding programs would be first steps in maintaining paid placement programs intact
Larger firms more likely to assign branding value to their search programs than smaller firms
Advertiser: n=123
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Most Advertiser Respondents Could Still Tolerate Further Price Rises, at Moderate Levels Four out of five respondents said they could tolerate further rises in paid placement prices
21% report they cannot afford to pay more for leads/conversions because they are currently at maximum efficiency.
Even among advertisers who report the capacity to increase ad expenditure, the vast majority can afford 30% or less.
Despite increasing ad spend and year-to-year growth in the value of search engine marketing, we are likely nearing a pricing plateau as advertisers near their maximum efficacy.
1%6%
1%2%
11%
0%0%0%1%
19%21%18% 17%
4%
0%
10%
20%
30%
Nothing;maxed out
already
10% more 20% more 30% more 40% more 50% more 60% more 70% more 80% more 90% more Tw ice asmuch
Threetimes as
much
Four timesas much
More thanfive timesas much
% o
f A
dve
rtis
er R
esp
on
den
ts
Ability to Afford Further Price Escalation in Paid Placement Ads
"Given the current efficiency you experience with Paid Placement programs, and the quality of the leads that this tactic generates, how much more could you afford to pay for the leads / conversions this channel provides before you could not justify the expense?"
Role of agencies
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Majority of 2006 Paid Placement Spending Will Be Managed In-House, Not Outsourced to Agencies
Two-third of advertiser respondents said they plan manage all of their 2006 paid placement spending in-house; larger firms were more likely to outsource more of their campaign budgets
Only 13% of advertisers plan to outsource more than half of their paid placement expenditures in 2006.
3%1%5%
1% 2% 3%0%
6%2%4%3%1%
3%9%
65%
6%1%
4% 2% 0%
69%
9% 7% 6%6%6%0%
6%3%
9%
53%
3% 3%0%
20%
40%
60%
80%
100% in hous e
90% in house
80% in hous e
70% in hous e
60% in house
50% in house
40% in hous e
30% in house
20% in house
10% in hous e
100% v iaSEM se rv ice
p rov ide r
% o
f A
dv
erti
ser
Res
po
nd
ents
A ll A dve rt is ers A dv er tise rs of <500 Employees A dv er tisers of 500+ Employ ees
Management of Planned 2005 Paid Placement Spending
"How much of your planned spending next year (2006) for Paid Placement programs are you likely to manage with in-house resources versus through an external search engine marketing service provider?"
Advertisers n=122
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
3%3% 1% 2% 0% 3%10%
3%3%3%0%2%
10%
64%
9%2% 1% 2%1% 0%
69%
9% 9%3%3%8%
0%5%8%
13%
51%
0% 0%0%
10%
20%
30%
40%
50%
60%
70%
100% in house
90% in hous e
80% in house
70% in house
60% in house
50% in house
40% in hous e
30% in house
20% in house
10% in hous e
100% v iaSEM se rv ice
p rov ide r
% o
f A
dve
rtis
er R
esp
on
de
nts
A ll A dve rt isers A dv er tise rs of <500 Employ ees A dve rt is ers of 500+ Employ ees
Management of Planned 2006 Organic Search Engine Optimization Spending
"How much of your planned spending next year (2006) for Organic Search Engine Optimization programs are you likely to manage with in-house resources versus through an external search engine marketing service provider?"
Majority of 2006 Organic SEO Spending Will Be Managed In-House, Not Outsourced to Agencies Like paid placement, nearly two-thirds of advertiser respondents said they plan to manage all of their 2006
organic SEO spending in-house; larger firms were more likely to outsource more of their campaign budgets
Only 11% of advertisers plan to outsource the majority of their organic SEO spending in 2006
Advertisers n=129
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Management of Planned 2006 Paid Inclusion Spending
“How much of your planned spending next year (2006) for Paid Inclusion programs are you likely to manage with in-house resources versus through an external search engine marketing service provider?”
Majority of 2005 Paid Inclusion Spending Will Be Managed In-House, Not Outsourced to Agencies Like paid placement and organic SEO, two-thirds of advertisers said they plan to manage all of their 2006 paid inclusion
spending in-house; larger firms were more likely to outsource more of their campaign budgets
The consistency in the data suggests an opportunity for agencies, if they can prove their value-add to clients. Agencies must prove that they can provide superior service in contrast to an advertiser bringing SEM in-house.
3 %2 % 4%0% 2%
7%
16%11 %
6%2%0 % 0%
5%
66 %
3% 2% 3 % 2 %5%0 %
7 0%
7% 4 %
2 1%
0%5%
0% 0%0 %0 %
5 8%
0% 0%0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
10 0% in h ou se
90 % in h ous e
8 0% in h ou se
70 % in ho us e
60 % in h ou se
50 % in ho us e
40 % in h ous e
3 0% in h ou se
20 % in h ous e
1 0% in h ou se
10 0% v iaSEM s erv ice
prov id er
% o
f A
dve
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esp
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de
nts
A ll A dv er tise rs A d ver tis ers o f <50 0 Emp lo ye es A dv er tise rs of 5 00 + Emplo ye es
Advertisers n=65
The click fraud problem
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Advertisers and agencies are becoming increasingly concerned about click fraud
Nearly 2 out of 5 advertisers and nearly half of agencies have tracked fraud; 16% of advertisers say it's serious, nearly triple from 2004
Yet a quarter do not believe it's a problem
A third of advertisers and a third of agencies are concerned but not tracking fraud
27%
0%
16%
33% 33%
18%
0%
23%16%
35%
25%
2%
18% 21%
34%
18%
38%
29%
9%6%
0%
10%
20%
30%
40%
50%
60%
This is a s ign if ic ant prob lem w ehav e t racked
It is a moderate prob lem w ehav e t racked
We have no t t racked it muc h,bu t w e are w or ried about it
It is no t a s ign if ic ant conc ern Neve r hea rd of it bef ore% o
f A
dv
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ser
Res
po
nd
ents
A ll A dver tis ers A dver tise rs o f <500 Emp loyees A dve r tisers of 500+ Employ ees A genc ies
Click Fraud vs. Paid Placement
"In your experience, how much of a problem is "click fraud" with regard to Paid Placement?"
RESEARCH HIGHLIGHTS
Advertisers n=122; Agencies n=282
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Over 2 out every 5 advertisers and half of all agencies have been a victim of click fraud
Over 40% of advertisers claim they’ve been a victim of click fraud and more than half of agencies.
Nearly 1/3 of advertisers do not know if they’ve been a victim of click fraud
51 % 49 %
0 %
3 8%42 %
2 1%
3 6%
1 8%
46 %
32 %27%
36%
0 %
10 %
20 %
30 %
40 %
50 %
60 %
Y es No I d on't kno w
% o
f A
dve
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esp
on
de
nts
A ll A dv er tise rs A dv er tise rs of <50 0 Emplo yee s A d ve rtis ers o f 50 0+ Emp loy ees A ge nc ie s
Prevalence of Click Fraud
"Have you been a victim of click fraud?”
RESEARCH HIGHLIGHTS
Advertisers n=122; Agencies n=282
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Competitive click fraud is less of a problem than publishers, networks and affiliates attempting to artificially inflate their clicks
More than three-quarters of advertisers claim their click fraud was due to publishers, networks or affiliates attempting to increase their revenue through non-authentic clicks
However, more than half also claim they have been a victim of competitive click fraud as well
41%
59%53%
78% 78%
53% 55%
82%
0%
10%20%
30%40%
50%60%
70%80%
90%
Competitiv e Click Fraud Publishe rs o r netw orks a ttempt ing to in f late rev th ru non-au thent iv e c licks
% o
f A
dve
rtis
er R
esp
on
de
nts
A ll A dv er tise rs A dve r tisers of <500 Employ ees A d ver tise rs o f 500+ Emp loyees A genc ies
Type of Click Fraud
"What type of click fraud did you experience?”
RESEARCH HIGHLIGHTS
Advertisers n=51; Agencies n=145
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Majority of advertisers and agencies have received an incremental credit for click fraud
Nearly 80% of advertisers who have been a victim of click fraud have received an incremental credit from an engine
Agencies are far more proactive than advertisers in initiating credit requests from search engines
Engines tend to initiate credit for advertiser
72%
29%
22%
78% 78%
22%18%
82%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Y es No
% o
f Adv
ertis
er R
espo
nden
ts
A ll A dve rt isers A dvert is ers of <500 Employ ees A dv er tise rs o f 500+ Employees A gencies
Compensation for Click Fraud
"Have you ever received an incremental credit from a paid search provider for click fraud?”
RESEARCH HIGHLIGHTS
Advertisers n=51; Agencies n=145
Initiation for make-good
"Was it based on your request or was the credit engine initiated ?”
60%
41%
60%
40% 39%
61%56%
44%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Based on y ou r request Engine Initia ted
% o
f A
dv
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ser
Res
po
nd
ents
A ll A dv er tise rs A dver tisers of <500 Employ ees A dver tise rs o f 500+ Emp loyees A gencies
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Advertisers report mixed results for their satisfaction level with their agencies
Just one thirds (33%) of respondents said they were happy ("moderately" or "very") with their SEM agencies for paid placement campaigns, down from 62% last year
A quarter of respondents are unhappy (“moderately” or “very”)
Over 2/5 of advertisers report “mixed results” when asked for their satisfaction level
23%
2%
19%
14%
42%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
V ery happy Moderate lyhappy
Mixed res ults Modera telyunhappy
V e ry unhappy
% o
f A
dv
erti
ser
Res
po
nd
ents
Opinion on SEM Service Providers
"How happy have you been in the past year with the services delivered by the primary SEM service provider you engage for Paid Placement programs?"
ADVERTISERS > PAID PLACEMENT
Advertisers n=43
The rise of local search
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
High Interest in Locally Targeted Search
ALL RESPONDENTS > GENERAL
Nearly a quarter of respondents (mostly agencies) have tried locally targeted search ads and think "it works great"
Almost a third had tried them and thought "it works okay"
Only 13% had tried them and were "not impressed"
More respondents had tested local search than not, particularly agencies
Level of Experience or Interest in Locally Targeted Search Keyword Text Ads
"What is your level of experience or interest in the following search marketing tactics: Locally Targeted Search Keyword Text Ads"
11%11%
23%
12% 1 1%1 6%
2 7%2 9%
3 6%
1 3% 11 %7%
4%
3 1%
2 3%
13% 1 1% 10%
0%
1 0%
2 0%
3 0%
4 0%
5 0%
Tr ie d it , w orks grea t Tr ied it, w o rks o kay Tr ied it, u nimp re sse d No exp er ien ce , bu t v eryinte res ted
No ex pe rien ce , b utso mew hat inte res te d
No ex pe rien ce , n otin teres ted
% o
f R
esp
on
de
nts
A ll Re spo nd en ts A d ve rtis ers A g en c ies
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
Not surprisingly, Google and Yahoo! Search dominate local search
Google AdWords Local Targeting is the most popular local search advertising program, used by 79% of advertiser respondents, 83% of agencies
53% of advertisers reported using Yahoo! Search’s Local Match paid placement program
Agencies are more likely to spend with the established search players for local targeting, while advertisers are more willing to spend with yellow page providers for local targeting
27 %32%
53%
79%
9% 6%
18% 16%
34%
67%
83 %
21%
9%
27%
% o f A d ve r tis e r Re s p o nd e n ts
A dv er tise rs A ge nc ie s
Most Popular Local Search Engine Networks Among Advertisers
“Where have you bought inventory for local search marketing?" [Multiple responses applicable]
Advertisers n=34; Agencies n=209
Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005
About the Research Partners
About the Search Engine Marketing Professional Organization (SEMPO)
SEMPO is a non-profit professional association working to increase awareness and promote the value of search engine marketing worldwide. The organization represents the common interests of more than 315 companies and consultants worldwide and provides them with a voice in the marketplace. For more information, or to join the organization, please visit www.SEMPO.org
About Radar Research, LLC
Radar Research is a Los Angeles-based research and consulting firm aimed at the nexus of media, technology, culture and commerce. It was founded by two former JupiterResearch analysts, Marissa Gluck and Aram Sinnreich. Radar conducts research on behalf of both corporate clients and non-profit organizations, such as DoubleClick, Sony Pictures Entertainment, Nielsen//Netratings, the Online Publishers Association and The Norman Lear Center. For more information, please visit www.radarresearch.com
About IntelliSurvey, Inc.
IntelliSurvey helps organizations, including leading research firms and in-house researchers, make better business decisions by gathering intelligence from their customers, members, and prospects. For more information, please visit www.IntelliSurvey.com