50% of respondents on the client side said they expect their own company to spend more on paid search this year
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.
IN-HOUSE VS. OUT-OF-HOUSE 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.
WHERE DOES THE MONEY COME FROM? 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.
When money is shifted into search from elsewhere in the marketing budget, what takes the hit? A plurality of client respondents (49 percent) and an outright majority of those on the agency/consultancy side (69 percent) pointed to print. It's not that search is inherently a predator vis-à-vis spending in traditional media. At the moment, though, with budgets often shrinking, it seems like a zero-sum game. "I think if it weren't for the recession, we wouldn't be talking about where the money is coming from," says Holoubek, especially since these old and new media ought to be working in concert. "In an ideal world, you have this virtuous circle in which media like TV and print create demand, and search captures it," she says.
Wherever the money comes from, its allocation to search had better pay off. But determining whether it is doing so remains a challenge for search, just as it is for any other form of marketing. When respondents were asked to identify the "greatest challenges" they confront in managing their paid search efforts, "measuring the ROI" garnered the most mentions from people on the client side (43 percent) and the agency/consultancy side (40 percent). The runner-up in each case was "optimizing destination pages." Measurement of ROI also was atop the list (in a tie with "optimizing destination pages," at 42 percent each) when client-side respondents were asked to cite the biggest challenges they face in running their SEO efforts. On the agency/consultancy side, measuring ROI tied (at 40 percent apiece) with "staying abreast of search engines' indexing algorithms and technologies."
DEFINING THE OBJECTIVES Of course, measuring return on investment entails knowing just what it is you want that investment to accomplish. What do companies want from their SEO efforts? For client-side respondents, the highest number of mentions as "most important" went to "generate leads" (34 percent) and "drive traffic to Web site" (32 percent). That's in sync with agency/consultancy respondents' sense of what their clients want to accomplish, with "generate leads" (35 percent) and "drive traffic to Web site" (30 percent) getting the most mentions. With regard to the objectives of paid-search efforts, client-side respondents gave the most votes to "sell products, services or content directly online" (39 percent) and to "generate leads" (37 percent). Here again, that's consistent with what agency/consultancy respondents said, with "sell products, services or content directly online" cited by 43 percent and "generate leads" by 40 percent.
With social media drawing more and more attention from marketers, the survey sought to gauge opinion of search professionals on how this might be affecting their work. On the client side, 33 percent of respondents agreed that "Social media is very much part of our search activity." Significantly more of the agency/consultancy respondents (48 percent) agreed that this is the case. Likewise, agency/consultancy respondents were more likely than their client-side counterparts to agree that the rise of social media has had an impact on their search efforts, 74 percent vs. 52 percent.
