Search Engine Marketers Spent $5.75 Billion in 2005, According to the Search Engine Marketing Professional Organization (SEMPO)

Google and Yahoo! Continue to Dominate Internet Advertising in North America

WAKEFIELD, MA– January 9, 2006 – Advertisers in the U.S. and Canada spent $5.75 billion on Search Engine Marketing (SEM) in 2005, a 44 percent increase over 2004 spending, according to a report released today by the Search Engine Marketing Professional Organization (SEMPO), a non-profit professional association working to increase awareness and promote the value of Search Engine Marketing worldwide.

The report, “The State of Search Engine Marketing 2005,” also projects that SEM spending in North America will reach $11 billion in 2010. The annual totals include payments to search engines and search-related media companies, search engine marketing agencies and in-house expenditures in support of such programs. The programs include paid placement, paid inclusion, organic search engine optimization and search engine marketing technology platforms.

The report is based on an industry-wide survey of 553 respondents conducted in November 2005 by Radar Research, LLC and Intellisurvey.

The survey found the bulk of the SEM spending was spent in 2005 on paid placement, accounting for 83 percent or $4.7 billion. While four out of five advertisers report they engage in organic search engine optimization (SEO), organic SEO accounted for approximately 11 percent of overall spending; paid inclusion accounted for just 4 percent of overall spending; and SEM technologies, including leasing, agency solutions and in-house development, accounted for less than 2 percent of overall spending.

“The data shows that 2005 was a good year for search, but 2006 should be a great year,” said SEMPO Research Committee Co-chair, Gord Hotchkiss. “The growth shown has largely been driven by maturation in existing segments. Future growth will be fueled by an increased search presence from major advertisers and new monetization strategies from the major engines. The increased competitiveness in the marketplace will really drive the industry forward in the coming year.”

The survey also found:

• Google and Yahoo still command the lion’s share of Internet advertising.
• Branding, sales, leads and traffic are the top objectives of paid placement programs.
• Little SEM funding is newly created; most is shifted from other programs.
• Advertisers and agencies are approaching their pricing limits.
• SEM agencies need to prove their value-add to advertisers.

For further analysis and additional data, download The State of Search Engine Marketing 2005 at http://www.sempo.org

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 http://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

For more information, contact:
Greg Jarboe
978-549-9537
pr@sempo.org