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JupiterResearch Reveals SEM Executive Survey Findings

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A majority of search marketers are planning on spending more on search this year, and are mostly satisfied with the return on investment (ROI) they are seeing from search. Those are two of the findings from a new JupiterResearch report, "US SEM Executive Survey, 2007: Understanding the Increasingly Sophisticated Search Marketer," released Tuesday afternoon at Search Engine Strategies New York.

"Very few people are dissatisfied with search. The ones that are tend to be smaller advertisers managing less than 1,000 keywords," Kevin Heisler, JupiterResearch analyst and lead author of the report, told ClickZ. "We see many advertisers getting more aggressive with their spending, especially agencies. They've figured out what makes search so successful, and are content with the ROI."

Most Search Marketers Satisfied with ROI

Overall, 65 percent of advertisers expect to increase their spending, while only 7 percent expect to decrease spending on search this year, and 28 percent expect no change in their spending.

The report found that 26 percent of large advertisers in companies with annual revenues of $50 million or more plan to increase spending on search engine marketing by more than 25 percent this year. Another 28 percent of large advertisers anticipate spending increases between 11 and 25 percent, mostly due to an expectation of a continued rise in keyword prices. About 21 percent of large advertisers expect no change in search spending.

Among advertisers in companies with annual revenues between $15 and $50 million, 23 percent plan to increase spending on search engine marketing by more than 25 percent this year, and 21 percent anticipate spending increases between 11 and 25 percent. In this group, 29 percent of advertisers expect no change in search spending.

For advertisers in companies with annual revenues between $1 and $15 million, 17 percent plan to increase spending on search engine marketing by more than 25 percent this year, and 24 percent anticipate spending increases between 11 and 25 percent. No change in spending is expected by 25 percent of these advertisers.

Among small advertisers, with less than $1 million in annual revenues, 28 percent expect to increase spending on search engine marketing by more than 25 percent this year; 14 percent anticipate spending increases between 11 and 25 percent; and 36 percent of advertisers expect no change in search spending.

The majority of advertisers, especially larger advertisers, report that they are satisfied with the ROI of their search marketing activities over the last year. Among advertisers in companies with annual revenues of $50 million or more, 27 percent reported being "very satisfied" with their ROI, and 40 percent said they were "satisfied." Another 25 percent said they were "neither satisfied nor dissatisfied," while 7 percent were "dissatisfied," and 2 percent were "very dissatisfied."

At the other end of the scale, small advertisers, those in companies with less than $1 million in annual revenues, were less satisfied, though about half were still satisfied (37 percent) or very satisfied (13 percent) with their ROI from search. Another 28 percent were neutral, while 17 percent were dissatisfied and 5 percent were very dissatisfied.

Search Marketers' Concerns

While search advertisers are mostly satisfied with their ROI, they still face several challenges. The biggest problem reported by advertisers across the board was rising keyword prices, which topped the list for large advertisers in companies with annual revenues of $50 million or more (64 percent), advertisers in companies with annual revenues between $15 and $50 million (64 percent), advertisers in companies with annual revenues between $1 and $15 million (63 percent), and small advertisers, with less than $1 million in annual revenues (57 percent).

The next-biggest concern of large advertisers was measuring the offline impact of search, reported by 50 percent of those advertisers. That was a concern of 34 percent of advertisers in the $15 to $50 million revenue range, 29 percent of advertisers in companies with annual revenues between $1 and $15 million, and 24 percent of smaller advertisers.

Tracking ROI was a bigger concern than measuring offline for everyone but large advertisers, but they were still concerned. Problems with tracking ROI were reported by 47 percent of large advertisers, 41 percent of advertisers in the $15 to $50 million revenue range, 48 percent of advertisers in companies with annual revenues between $1 and $15 million, and 41 percent of smaller advertisers.

Less than a quarter of advertisers report a decline in ROI from their search marketing efforts last year. That was the case for 20 percent of large advertisers, 20 percent of advertisers in the $15 to $50 million revenue range, 23 percent of advertisers in companies with annual revenues between $1 and $15 million, and 22 percent of smaller advertisers.

The next two concerns fall into a similar category: managing and expanding list of keywords and managing multiple engines. Among large advertisers, 45 percent reported problems with expanding keywords, and 43 percent with managing multiple engines. For advertisers in companies with annual revenues between $15 and $50 million, 39 percent reported problems with expanding keywords and 38 percent with managing multiple engines. In the $1 to $15 million range, 42 percent reported problems with expanding keywords, and 51 percent with managing multiple engines. Among smaller advertisers, 42 percent reported problems with expanding keywords, and 41 percent with managing multiple engines.

Click fraud was reported as a problem by between a quarter and a third of advertisers, depending on their size. Problems with click fraud were reported by 24 percent of large advertisers, 31 percent of advertisers in the $15 to $50 million revenue range, 31 percent of advertisers in companies with annual revenues between $1 and $15 million, and 25 percent of smaller advertisers.

Measurements and Objectives of Search

Many of the problems with measuring and tracking ROI are the result of advertisers not adequately implementing analytics, Heisler said. The problem is especially magnified for marketers looking for branding effects from search, he said.

"Direct response marketers by far have been better at measuring ROI. Branding measurement is more complex, and many marketers are not using the right metrics or analytics goals," he said. "Overall, many marketers are not using analytics to their fullest extent, although they've really closed the gap in the past year."

More advertisers are beginning to use sophisticated measurements of ROI, especially multi-channel retailers, who for example might implement metrics for things like return on profit margin, rather than the simpler return on ad spend, he said.

"The way we analyze and measure, across the board, is very narrow. The focus has always been on last click. Google and the other search engines have tremendously benefited by lack of sophistication in the way marketers have tracked their search marketing results," he said.

That's beginning to change, as more marketers begin to understand and measure "assists" and other more granular metrics, and to tie in the effects of other media on the sale, he said.

Large search marketers are becoming more savvy with aligning their measurement with their goals. Among large advertisers with more than $50 million in annual revenues, 45 percent of marketers reported an objective of lead-generation, while 37 percent measure that objective on a regular basis. Among advertisers with annual revenues between $15 and $50 million, 39 percent say lead-generation is an objective, and 33 percent measure it.

Lifetime revenue-per-user is the next most common objective, reported by 28 percent of advertisers in both groups, while 22 percent of large advertisers measure it and 21 percent of advertisers in the $15 to $50 million range do so. Profit-per-user is another popular objective, named by 24 percent of large advertisers (and measured by 26 percent of them) and 29 percent of advertisers in the $15 to $50 million range (and measured by 28 percent).

Search Marketers Getting Adventurous

Advertisers are planning on utilizing many more new tactics this year than last, with geographic and demographic targeting, local search, and contextual advertising topping the list of tactics marketers expect to try out.

This year 72 percent of marketers say they'll try geo-targeting, compared to 43 percent who used it last year; and 78 percent planning to try local search this year, compared to 42 percent last year. Contextual advertising is on the list for 57 percent of respondents this year, compared to 41 percent who used it last year; and demographic targeting is planned by 64 percent of respondents this year, compared to 41 percent last year.

Other tactics planned for this year include multimedia search optimization (52 percent this year, 35 percent last year), international search marketing (46 percent/30 percent), language and location targeting (57 percent/29 percent), behavioral targeting (45 percent/28 percent), customized targeting (53 percent/27 percent), mobile search (41 percent/15 percent) and pay-per-call (32 percent/10 percent).

A positive sign for search marketers is the attention search is getting from top executives, Heisler said. "For the first time, CEOs are the top destination for reports," he said. "That's partly due to responses from smaller companies where the CEO is more involved in day-to-day operations, but it's happening in large companies too."

When asked who receives regular reports on the status of search marketing campaigns, 43 percent said they provide them to the CEO, 20 percent to their chief marketing officer (CMO), and 8 percent give reports to a CTO. In addition, 42 percent provide reports to a director of marketing, 39 percent to a VP of marketing, and 39 percent to a marketing manager.


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