Companies invest almost $13.5 billion dollars annually on search marketing, with their main focus being on increasing brand awareness and selling products and services online, a recent study shows.

“The State of Search Engine Marketing, 2008,” released by the Search Engine Marketing Professional Organization (SEMPO), surveyed 890 search engine advertisers and SEM agencies. According to Radar Research, the firm that conducted the survey for SEMPO, SEM spending will grow about 9% in 2009 to $14.7 billion, and reach $26.1 billion in 2013.

Picture 12.pngI was struck by the disproportionate amount of Search spend by companies that was dedicated to paid placement versus the development of organic search. Consumers are much more inclined to trust and click through organic search results. Also, the impact of developing strong organic search implementation is long-lasting, while the investment in paid search lasts only as long as a company is spending money.

According to the SEMPO survey, marketers spent $11.9 billion on paid placement, or 88.4% of all Search spend, and only $1.4 billion on organic SEO work.

This disconnect illustrates one of the brilliant inconsistencies of Google’s business practices: The company offers a high level of transparency on the statistics related to paid search, and is virtually opaque as it relates to its practices for managing organic search results.

This kind of information chasm makes it much easier for companies to invest money on paid search, where they can forecast results with fairly high accuracy. In our own experience, we’ve worked with some organic search consultants and with our internal resources and have felt like we were being initiated into a black art with levels of knowledge we weren’t allowed to access to.

If services like Twitter and Facebook are successful in dislodging some of Google’s supremacy in search, I suspect Google will begin to make its organic search results more understandable.

In the meantime, the search game is so clearly Google and everyone else.

Picture 9.pngPicture 8.png98% of the companies surveyed used Google’s Adwords on Google’s site; Yahoo was the second most popular brand at 68% usage, down from 86% in 2006.

Search spending is also driving an expansion of marketing budgets. 52% of the respondents said that all or part of their budget for SEM came from new funds; 22% said that they funded SEM by shifting dollars from other medium. In terms of the media losing share of the marketing budget, 25% of respondents said they shifted money away from print magazines, followed by direct mail, newspapers and web site development.

The leading goal of search marketing programs was to “increase or enhance brand awareness,” cited by 63% of the respondents. “Selling products and services online” was a goal of 61% of the respondents, followed by “generated leads to close ourselves,” cited by 56% of the respondents. They measure their effectiveness in accomplishing those goals by tracking increases in traffic volume, conversion rate and click-thru rate. The focus on tracking underscores the ability to clearly translate the ROI of marketing programs online.