Search engine marketing remains hot, but rising keyword prices and the inability to effectively track and manage campaigns across multiple engines continues to fuel advertisers' dissatisfaction. Most marketers will increase spending in 2007, according to Jupiter Research's "U.S. Search Engine Marketing Executive Survey, 2007," with more than 56 percent of companies with annual revenues of $50 million or more planning double-digit percentage increases in search marketing budgets.
Of these, 26 percent of marketers plan to increase spending by more than 25 percent in 2007, while an additional 28 percent plan to increase spending from 11 percent to 25 percent. This increased spending is being driven, in part, by marketers' frustration with tracking the effectiveness of search marketing. Moreover, advertisers keyword prices continue to rise, while conversion rates stagnate. More than 60 percent of marketers cited rising keyword prices as a problem, while another 43 percent said they had difficulty managing search across multiple engines and discovering new keywords, says Kevin Heisler, Jupiter analyst and lead author of the report. "Different engines using different matching criteria can present problems when it comes to matching results across multiple sites." As a result, dashboards and reporting capabilities are becoming increasingly popular, as search engine marketing vendors look to "keep up with the engines," Heisler says.
With companies under pressure to spend more on search to keep up with the market, the study warns that due attention must be paid to budget optimization. Managing search marketing across engines (43 percent) and selecting key words (39 percent) are the biggest challenges in search marketing. However, Heisler does not believe that budget worries (or anything else) could derail the growth of search marketing. "Search engines themselves are striving to offer so much more to marketers in terms of data and measurement to encourage their spending in this area. They are also, on the other side, offering better relevancy and categorization for searchers. In the end, marketers are getting enough ROI to justify the spending."
Search marketing is also becoming top-of-mind for senior executives. Advertisers report 43 percent of CEOs now receive regular reports on search marketing campaigns, surpassing even directors of marketing (42 percent) as the most frequent recipients of reports. In addition, 39 percent of vice presidents of marketing receive regular reports, representing a "big change from the past," Heisler says. "The ability to now attribute ROI to search engine campaigns means that c-level executives are taking an interest like never before."
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