Search Engine Marketing Trends
BY: Itai Levitan

Search engine marketing is on constant evolution

The world of search engine marketing is in constant evolution. With increase in the number of search engines and evolution in the techniques and technologies used, search engine marketing is becoming a tool industries cannot afford to do without. Trends all over the world show that the pressure for search engine marketing services is starting to come from below – for the individual clients and organizations themselves. Indeed, search engine marketing is quickly evolving as the buzz word in a new, technology-driven advertising and marketing space. As a result, companies that are serious about their online marketing are incorporating search marketing into their branding and direct response marketing efforts.

Meet the search engines

Google, Yahoo, MSN are the search engine big boys, with Google being the strongest. AOL, Ask Jeeves and Altavista lead the SEM scenes, while a number of other geographically-specific and market-specific search engines are also successful. In a study conducted in July 2005, Nielson/Netratings reported that the search engine marketing share was highest for Google at 48%. Yahoo and MSN had the market shares of 22% and 12% respectively.
MSN and Google were also the top destinations for most online purchases, reported a study conducted by comScore Networks (June 2005). The study highlighted that in, MSN searchers were 48% more likely to buy online than the average Internet user. Google users were 42% more likely to buy online than the average Internet user. It also came to notice that while Google searches looked for more sophisticated search terms, simple broad term searches occurred for AOL, Yahoo and MSN. Demographically, more men searched on Google at 55.1% while AOL was female dominated at 52%.

Search engine marketing - another bubble?

One thing is becoming clearer today: Search engine advertising is not another Internet bubble, even if certain shares may be trading higher than they should. It is not only happening in the Silicon Valley either. It is driven by users and the fact that people, everywhere, need to go somewhere to search and find information. Take China for example - who's heard of Baidu.com? Not too many people. It's a Chinese search engine that has been around for 5 years and is the World's 6th most-visited Internet site, thanks to China's fast growing internet market, currently with more just over 100 million Web surfers. Baidu is approaching an IPO and according to eNet.com.cn, a Chinese news site, will list on the NASDAQ on August 4, planning to 3.7 million shares of stock at between US$19 and $21 per share. And what about Google? It recently reported quarterly revenues of $1.4 billion. Google's revenues excluding its payments for other websites in its advertising network jumped to $890m, an increase of 110 per cent from a year before and above the expected $842 Million. "Business is very good here at Google," said Google CEO, Eric Schmidt.

Search engine marketing forecast

US Online Marketing Forecast: 2005 To 2010 by Forrester Research (May 2005) revealed that the arena for search engine marketing is all set to rise and will show growth of 33% in 2005. Forecasts reveal that the figures will reach $11.6 billion by 2010. Display advertising, which includes traditional banners and sponsorships, will grow at the average rate of 11 percent over the next five years to $8 billion by 2010. Total spend on US online advertising and marketing will reach $14.7 billion in 2005, a 23 percent increase over 2004. Trends also showed that while SEM is set to become more effective than traditional marketing channels, barriers include a lack of online advertising standards and hands on experience that prevent marketers from embracing them fully.

Search engine marketing in Europe

Search engine marketing (SEM) trends in Europe reveal a positive picture too. A study conducted by Forrester Research, entitled “Europe’s Search Engine Marketing Forecast, 2004–2010”, predicts that by 2010, European marketers will spend almost 3 Billion Euro on search marketing. This will be a rise from EU856 million in 2004. Research also shows that SEM is set to increase by 65% in 2005 with EU1.4bn being spent on sponsored links and search engine optimization (SEO). This growth spurt may however cool down to a simmer by 2007 as rich media ads begin to dominate the Internet marketing landscape. The UK continues to be the largest online ad market in Europe with SEM forecast to grow to over EU1bn in 2010, up from EU763m at the end of 2005. France is the biggest growth market with 19% of search marketing spend by the end of 2005 and 31% by 2010. Germany follows second with a spend of EU165m in 2004. However spending in Germany will slow down and reach EU399m in 2010 from EU165m in 2004. Growth will be lead by marketers in the travel, finance, auto, and retail sectors.

Search engine traffic is only a means to an end

Besides all these big numbers and back to the customers, it is important to note that for advertisers, search engine traffic is, typically, only a means and not an end. Lots of targeted traffic from active users in real time is great only if users perform the target action/s of the website (e.g. fill out the contact form, download the demo, register to the newsletter, complete the purchase online, make a comment with the forum, etc.). The few companies that are already engaging in search engine marketing at a professional level know this well and are putting in significant efforts in integrating conversion rate improvement mechanisms and work processes into their web marketing efforts. Surprisingly or not, there are too many times where marketing managers do not know if one channel generated a higher return on investment (ROI) than the other. Furthermore, they usually don’t know how to measure their channel-specific cost per action (CPA) or cost per customer acquisition. The leading companies in the web marketing space have already learned that it is more efficient and ROI-effective to identify how to raise an existing conversion rate from, say, 2% to 4%, rather than paying to buy 100% more incoming traffic.

About the Author

Managing partner at EasyNet, an innovative search engine marketing firm. An experienced Internet marketing specialist with 8 years of hands-on multidisciplinary experience in the Web arena. Itai is a former software engineer with a BA in Computer Science and 4 years of software development experience online. An MBA graduate, Itai is a dedicated entrepreneur who is passionate about people, team work and Web marketing.