June 8, 2006

Overall, the percentage of search engine marketers with annual revenues of $15 million or more has increased from 25 percent last year to 37 percent this year, according to Jupiter Research.

The new Jupiter report called "US SEM Executive Survey for 2006" reveals that the number of search engine marketers using bid management tools and Web analytics applications has risen from 19 percent in 2005 to 26 percent in 2006.

"The growth in size and diversity of search campaigns will accelerate search engine marketing (SEM) outsourcing," said Sapna Satagopan, Research Associate at JupiterResearch and lead author of the report. "More than fifty percent of large marketers outsource at least one of their search marketing services."

The report also finds that investments and overall spending on search engine marketing grew last year. Almost 24 percent of search marketers spent more than $500,000 on SEM campaigns last year, compared with 12 percent two years ago.

The increase in spending will force competitors as well, effectively pushing smaller marketers to optimize their campaigns, in an effort to better compete in the search marketplace.

In 2006, about 65.9 percent of marketers plan to boost their search marketing spending. This number climbs to around 72 percent when referring to sophisticated marketers, or those who use bid management tools and Web analytics packages.

One of the factors contributing to the increase in spending is the mounting costs of traffic acquisition.

"Fifty percent of search engine marketers rank Web site traffic as their preferred metric for measuring overall success," said David Schatsky, President of Jupiter Kagan.

"There is an increasing cost associated with this traffic, primarily driven by the rise in keyword costs and the added expense of migrating to new search providers."

The complete findings of this report are available to Jupiter Research clients online at www.jupiterresearch.com.

Source: Jupiter Research