Posted March 17, 2008 9:09 am by with 8 comments

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The nonprofit Search Engine Marketing Professional Organization (SEMPO) surveyed over 867 search engine advertisers and SEM agencies to get a picture of the state of the search engine marketing industry. The 2007 SEMPO State of the Market Survey shows that contrary to worries about the economy, search engine marketing budgets have risen even higher than projected.

That’s the findings SEMPO is releasing today at the Search Engine Strategies (SES) conference in New York. They found that things look rosy for the search engine marketing industry. The North American SEM industry grew from $9.4 billion in 2006 to $12.2 billion in 2007. That’s more than earlier projections of $11.5 billion in 2007. Forecasts for this year was that the industry would reach $25.2 billion by 2011. Again, the projection is up significantly – last year the projection was $18.6 billion.

Spending on search engine marketing in North American is now projected to grow to $25.2 billion in 2011, up significantly (over 6 billion) from the forecast a year ago which was $18.6 billion. As the story repeats – marketers are shifting their advertising from offline advertising to spending more on paid search.

This should be especially good news for Google (and Google shareholders), since it’s the only search engine in the top four to get a bigger share of the market. 97% of the marketers survey use Google AdWords. 70% utilize Yahoo Sponsored Search and less marketers use MSN and than last year.

“Search marketing spending is increasing at the expense of print magazine advertising,website development and other marketing functions, as marketers essentially shift the portions of their spending pie, following consumers as they increasingly rely on search engines to conduct pre-purchase research.”

Some of the reasons for the growth is that more small and midsize business are going online and using paid search. Plus the cost of advertising is going up because of more competition. Right now 87.4% of advertisers in the survey use paid search. The part that most surprises me is that SEO accounts for just 10.5% of their total marketing spend.