The total market for search marketing in the U.K. grew at a blistering 100% rate in 2005, and further double-digit gains are expected for this year, according to a new report from E-consultancy.
The report, included in the E-consultancy Search Marketing Buyer's Guide for 2006, says the U.K. market for search engine marketing will be worth an estimated £1.41 billion ($2.6 billion) by the end of 2006, translating into a 65% overall growth rate for both paid search and organic search engine optimization. This figure is up from £855 million ($1.7 billion) spent in the U.K. on search engine marketing in 2005.
Paid search amounts for the bulk of this market, capturing more than £1.26 billion ($2.4 billion), or 90% of the total. The majority of this money, of course, goes to the paid search providers such as Google, Yahoo and MSN.
Even still, organic SEO is thriving. E-consultancy estimates that SEO will be worth £147 million ($276 million) by the end of 2006, up 50% from £98 million ($184 million) in 2005.
What's driving these growth rates?
Demand is a key factor in the increase in paid search ads. Online advertising now accounts for nearly 8% of total advertising spend in the U.K., according to the IAB, while up to a quarter of media consumption is now online. Paid search offers one avenue for advertisers to address this gap.
Internet usage continues to grow in the U.K., and marketers are increasingly savvy about reaching users when they are in "search mode" and potentially more ready to convert.
On the organic SEO side, E-consultancy echoes Jupiter Research findings suggesting that upwards of 80% of all commercial clicks come from organic search results. Furthermore, there's increasing sophistication among search marketers who realize that the ROI case for paid search isn't as compelling due to keyword inflation and the fact that improved analytics tools make it possible to more accurately track ROI with organic listings.
SEO is now seen as more strategic, with organic listings perceived as complementary to paid search listings. The SEO process has evolved to become more transparent, with more firms stressing ethical techniques. And concerns over click-fraud have pushed more firms toward organic SEO.
Increasingly, firms are seeing search as part of a bigger overall marketing picture, with search being integrated with both other online marketing activities as well as more traditional offline marketing. Knowledge and sophistication have increased, with the report suggesting that search marketing is now understood at the boardroom level of many companies.
Four Key Trends
E-consultancy noted four key trends playing out in the U.K. search marketing environment. These are:
- Growth in the market for SEO services will continue to accelerate during 2006 as marketers increasingly realize the importance and value of organic listings.
- Marketers are becoming more savvy about Paid Search ROI.
- Search is increasingly being built into overall marketing plans as it becomes more strategic.
- There is increased awareness about the need for ethical SEO.
Search Marketing Costs
A separate report, E-consultancy's SEO Best Practice Guide, breaks down the costs of organic SEO and paid search advertising campaigns. The report notes that the two most common models now are consultancy-based, with daily fees charged up to an agreed-upon maximum, and performance-based, most commonly used for paid-search campaigns.
Prices for SEO range from about £2,000 ($3,800) for a relatively simple small-to-medium size business, to costs running into tens of thousands of pounds for larger enterprises committed to a long-term approach.
The agencies profiled in the Best Practice guide typically charge day-rate fees in the range from £500 to £1,000 ($940 - $1900) per day. Charges for SEO are typically based on an initial project set-up fee and an ongoing monthly charge for management and reporting, with the set-up fee ranging between £1,000 and £6,000 ($1,900 - $11,000) depending on the scope of the project.
E-consultancy subscribers can download the 204 page Search Marketing Buyer's Guide for 2006 or the 208 page SEO Best Practice Guide. Non-subscribers can purchase either report for £99+VAT ($186). Individual annual subscriptions start at £149 + VAT ($280).
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