Transcript Survey of Advertisers and Agencies Search Engine Marketing

The State of
Search Engine Marketing 2007
Canada
Survey of Advertisers and Agencies
Search Engine Marketing Professional Organization (SEMPO)
March 2008
Research Project Objectives
PROJECT OVERVIEW
Radar Research, Inc oversaw the following research initiatives as part of this
project:

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
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08. Global
Results. Copyright © 2008
2
DEFINITIONS: Respondents Were Given the
Following Definitions at the Start of the Survey
PROJECT OVERVIEW

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.
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08. Global
Results. Copyright © 2008
3
Research Methodology
PROJECT OVERVIEW
Radar Research oversaw the following research initiatives as part of this
project:

Development of SEM forecast model

Detailed online survey completed by 882 search engine advertisers and
SEM agencies globally, administered via IntelliSurvey, Inc. with 96
Canadian respondents

Extensive analysis of secondary research, reporting and commentary
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08. Global
Results. Copyright © 2008
4
2007 North American SEM Industry Size Estimate,
by Tactic
RESEARCH HIGHLIGHTS
2007 Advertiser SEM Spending
Share of Total
Share of Tactic
Paid Placement
Search Media Firms
SEM Agencies
In-House
$10,648,350,000
$9,597,200,000
$308,640,000
$742,510,000
87.4%
78.8%
2.5%
6.1%
90.1%
2.9%
7.0%
Paid Inclusion
Search Media Firms
SEM Agencies
$85,290,000
$76,760,000
$8,530,000
0.7%
0.6%
0.1%
90.0%
10.0%
Organic SEO
SEM Agencies
In-House
$1,279,210,000
$263,510,000
$1,015,700,000
10.5%
2.2%
8.3%
20.6%
79.4%
SEM Tech
Leasing
SEM Agencies
In-House
$171,690,000
$12,470,000
$61,540,000
$97,680,000
1.4%
0.1%
0.5%
0.8%
7.3%
35.8%
56.9%
Total
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08. Global
Results. Copyright © 2008
$12,184,540,000
Source: Radar Research
5
Forecast, North America, 1/08
North American SEM Expenditures to Reach
$25.2B in 2011

Growth will be driven by:
– Advertiser demand
– Rising keyword pricing and cost per click
– Increase in small-to-midsize businesses using SEM
– Greater consumer usage of search utilities
– Better targeting and niche offerings
RESEARCH HIGHLIGHTS
(billions)
Search Engine Marketing Projections, North America 2007-2011
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08. Global
Results. Copyright © 2008
Source: Radar Research
6
Forecast, North America, 1/08
Majority of Canadian Respondents from Ontario
and British Columbia
RESEARCH HIGHLIGHTS
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008

More than 2 out of
5 respondents are
from Ontario

Almost a third are
from British
Columbia

13% are from
Alberta, 11% from
Quebec
Total n=96
7
Brand, Sales, Leads and Traffic Are Top Objectives
of Paid Placement Programs Among Advertisers
RESEARCH HIGHLIGHTS

Among advertisers, selling products is the top objective of Paid Placement campaigns

Increasing or enhancing brand awareness follows closely as an objective for Paid Placement
Purpose of Search Engine Marketing
"What is your company using search engine marketing to accomplish?"
[Multiple responses applicable]
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan
08.Canadian Results. Copyright © 2008
Advertisers n=39
8
Google, Yahoo Most Popular Search Media
Companies
ADVERTISERS > PAID PLACEMENT
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]

Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Google AdWords is the most popular search
advertising program, used by 93% of
respondents

67% reported using Yahoo’s general “Sponsored
Search" paid placement program

MSN is also used by two-thirds of advertisers,
making the site more popular in Canada than it
is with global respondents

Of the rest, Ask.com was the next most-popular
search ad program, consistent with global
results
Advertisers n=27
9
Site Traffic, Conversion Rate, Click-Thru and ROI
are Top Performance Metrics for SEM Programs
RESEARCH HIGHLIGHTS

More than 50% of respondents tracked the following success metrics for the SEM campaigns: site traffic, postclick conversion, click-thru rate, ROI, cost-per-click, cost-per-action (e.g., sale), and sales volume

Agencies were more likely to track all metrics by about a margin of 10-20% in the case of all metrics

These figures are very consistent with the 2006 survey
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?"
% of Advertiser Respondents
100%
80%
80%
79%
70%
68%
56%
60%
56%
52%
50%
49%
47%
44%
39%
40%
35%
20%
0%
Increased traffic
volume
Conversion rate
Return on
Investment
Click-through rate
Cost per click
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08. Canada
Results. Copyright © 2008
CPA
Total number of
online sales
Overall revenue
increase
Stickiness
Number of pages
visited after click
Return on
Adspend
Navigation path Rank of link on
visited on web site
SE
after click
Total n=96
10
SEM Is Poaching Budget From Both Online and
Off-line Marketing Programs
RESEARCH HIGHLIGHTS
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?"
 The biggest shares of budgets for
SEM programs are being shifted away
from offline marketing such as print, as
well as online marketing such as Web
site development and affiliate marketing
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=23
11
Paid Placement Prices Have Risen Moderately
RESEARCH HIGHLIGHTS

Agencies feel greater price increases than advertisers

Almost two-thirds of advertisers and agencies reported a price increase

Eleven percent of both advertisers and agencies do not know whether they are paying more for paid placement in
2007 versus the previous year, consistent with the global survey results
Changes in Paid Placement Prices
"Have you observed prices for Paid Placement ads change in the last year for the keywords you routinely bid on?"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=27;
Agencies n=36
12
Most Advertiser Respondents Could Still Tolerate
Further Price Increases, at Moderate Levels
RESEARCH HIGHLIGHTS

Over three-quarters of respondents said they could tolerate further rises in paid placement prices

22% report they cannot afford to pay more for leads/conversions because they are currently at maximum
efficiency, consistent with the global survey results

Even among advertisers who report the capacity to increase ad expenditure, almost half 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.
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?"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=27
13
Advertisers Would Improve Their Marketing
Efficiency Rather Than Cut Back On Budget
RESEARCH HIGHLIGHTS

Improving site conversion efficiency and improving the overall efficiency of bidding programs would be advertisers’
first steps in maintaining paid placement programs

Almost a quarter of respondents said they would rely more on outside SEM providers and 15% said they would
rely less on outside providers.
Advertisers’ Reaction to Increasing Cost
"How would you likely react to hypothetical scenario where the cost of Paid Placement steadily increased for the next two
years?” [Multiple Responses Allowed]
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=27
14
Advertisers Are Overwhelmingly Interested in
Behavioral Targeting Opportunities
RESEARCH HIGHLIGHTS

Over nine out of ten advertisers indicated they were wiling to pay more for behavioral targeting opportunities,
particularly for in-market consumers

There is also strong interest in demographic targeting that allows marketers to reach certain demographics such
as age and gender, however advertisers are not particularly enthralled by the prospect of daypart targeting
Willingness to Pay More for Certain Types of Targeting
"Are you willing to bid more for clicks based on the following types of targeting criteria"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=27
15
Search Retargeting Based on Behavior Is Still In
Its Infancy But Interest Is Strong
RESEARCH HIGHLIGHTS

While advertiser interest in behavioral targeting is very strong, actual investment is still low

Almost three in five (59%) advertisers said they are not currently targeting or retargeting searchers but plan to in
the next 12 months

Less than two in five (19%) said they are not currently targeting or retargeting searchers and do not plan to in the
next 12 months

41% said they were targeting searchers either through an ad network, a portal or who had previously visited their
site
Advertisers Interest in Behavioral Targeting for Search Retargeting
"Are you using behavioral targeting solutions for search retargeting? [Multiple Responses Allowed]
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=27
16
Advertiser Respondents Spanned Several Service
Sectors
ABOUT RESPONDENTS

Retail, business, health and travel services, and manufacturing are the top
sectors represented by advertiser respondents.
Survey Participants’ Industry Sectors
“What best defines your industry sector?”
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Total n=39
17
Canadian Advertisers Expect to Book Lower 2007
Revenues than Global Respondent Base
ABOUT RESPONDENTS

One-third of Canadian advertisers expected less than $1 million in 2007 revenues, compared to
only one-fifth of total survey respondents

More than half of Canadian advertisers (56%) expect to book between $1-100 million in 2007

Only a single Canadian advertiser respondent (representing 3% of total respondents) reported
2007 revenues above $1 billion
Revenue Expected for 2006
“How much revenue do you expect your business to book in 2007?”
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers Global n=341;
Canadian n=39
18
Organic SEO Most Popular of SEM Programs
With Advertiser Respondents - and Growing
RESEARCH HIGHLIGHTS
Engagement in SEM Programs
"Do you currently engage in …?"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008

More than four out of five Canadian
advertiser respondents (85%) engage in
organic search engine optimization slightly lower than global respondents

More than two-thirds (69%) engage in
paid placement - on par with global
respondents

Only a tenth of Canadian advertisers
engage in paid inclusion, far lower than
the 26% worldwide
Advertisers n=39
19
Organic SEO Is Top SEM Service Offered by
Canadian Agencies
RESEARCH HIGHLIGHTS
SEM Program Offerings
"Do you currently offer the following SEM services …?"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008

Paid placement and Organic SEO were
offered by the vast majority of agency
respondents

Paid inclusion is still offered by a majority
of agencies, even if demand by
advertisers is low
Agencies n=57
20
Majority of Respondents Who Engage in Paid SEM
Shift Budget Away From Other Marketing Programs
RESEARCH HIGHLIGHTS

About a third of respondents said their funding for paid placement and paid inclusion came from
newly created budgets, on par with global figures

Nearly half of respondents said they were shifting in whole or in part budgets from other marketing
programs to fund these new initiatives
Source of Budget for Paid Placement and Paid Inclusion Programs
"Where is the budget coming from for your Paid Placement and Paid Inclusion programs?"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=39
21
Majority of Respondents Shift Budget Away From
Other Marketing Programs for Organic SEO
RESEARCH HIGHLIGHTS

Over a third of respondents (36%) said their funding for organic search engine optimization
programs came from newly created budgets, similar to global respondents

About half of respondents (51%) said they were shifting in whole or in part budgets from other
marketing programs and/or web development budgets to fund these new initiatives
Source of Budget for Organic Search Optimization Programs
"Where is the budget coming from for your Organic Search Optimization programs?"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08. Global
Results. Copyright © 2008
Advertisers n=39
22
Canadian Agencies Anticipate Greater Spending
Increases than Advertisers Across the Board
RESEARCH HIGHLIGHTS

Agency respondents anticipate 2008 spending to increase faster than advertisers plan to increase
spending. This suggests they must look to new contracts, rather than simply raising prices

Agencies may be over-optimistic in some cases, such as paid inclusion, which is unlikely to draw
many new customers -- and will be likely to continue to lose them
Expected Increase in 2008 over 2007 for Specific SEM Programs
"How much more or less do you expect to spend/book in 2008 compared to 2007 for [each of the following SEM programs]?"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=39
Agencies n=57
23
Nearly Half of 2008 Paid Placement Spending by
Canadian Advertisers Will Be Managed In-House,
Not Outsourced to Agencies
RESEARCH HIGHLIGHTS

Nearly half of Canadian advertiser respondents (44%) said they plan manage all of their 2008 paid placement
spending in-house; slightly fewer than among total global advertiser respondents

A third of Canadian advertisers plan to outsource the majority of their paid placement expenditures in 2008,
slightly higher than the number for global respondents
Management of Planned 2008 Paid Placement Spending
"How much of your planned spending next year (2008) for Paid Placement programs are you likely to manage with
in-house resources versus through an external search engine marketing service provider?"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=240; 27
24
Majority of Canadian 2008 Organic SEO Spending
Will Be Managed In-House, Not Outsourced
RESEARCH HIGHLIGHTS

Over half of advertiser respondents said they plan to manage all of their 2008 organic SEO
spending in-house; this is similar to overall global survey figures

Fewer than a quarter (24%) of Canadian advertisers plan to outsource the majority of their organic
SEO spending in 2008
Management of Planned 2008 Organic Search Engine Optimization Spending
"How much of your planned spending next year (2008) for Organic Search Engine Optimization programs are you likely to
manage with in-house resources versus through an external search engine marketing service provider?"
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008
Advertisers n=33
25
Most Canadian Advertisers Are Willing to Bid More
in Order to Reach Particular Demographics
ADVERTISERS > TARGETING
Demographic Targeting
 Are you willing to bid more for clicks that only
reach certain demographics such as age and/or
gender?
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008

How much more would you pay for the optimal
age/gender combination?
Advertisers n=36
26
Nearly All Canadian Advertisers Are Willing to Bid
More in Order to Reach Consumers Based on Behavior
ADVERTISERS > TARGETING
Behavioral Targeting
 Are you willing to bid more for clicks based on
behavioral information such as in-market
consumers (i.e. consumers currently shopping
for a specific product)?
Source: Search Engine Marketing Professional Organization
survey of SEM agencies and advertisers, Dec 07-Jan 08.
Canadian Results. Copyright © 2008

How much more would you pay for optimal
behavioral projections on future purchases?
Advertisers n=36
27
Thank You
RADAR [email protected]
28