survey of advertisers and agencies search engine marketing professional organization (sempo)...

Survey of Advertisers and Agencies Search Engine Marketing Professional Organization (SEMPO)

December, 2005Initial Results for SEMPO Member

The State of Search Engine Marketing 2005

Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December 2005. Global Results. Copyright © 2005

Research Project Objectives

Understand the size of the industry in order to help promote its growth

Understand where marketer spending is going, among different recipients (search engine media companies, SEM agencies, in-house) and towards what types of SEM programs (paid placement, paid inclusion, organic SEO, SEM technology)

Identify key industry trends

Identify key industry issues SEMPO should address

PROJECT OVERVIEW

Radar Research, LLC oversaw the following research initiatives as part of this project:


DEFINITIONS: Respondents Were Given the Following Definitions at the Start of the Survey

Search Engine Marketing (SEM): the entire set of techniques and strategies used to direct more visitors from search engines to marketing web sites, including all of the tactics and strategies defined below.

Paid Placement: Text ads targeted to keyword search results on search engines, through programs such as Google AdWords and Yahoo Search "Precision Match," also sometimes referred to as "Paid Placement," "Pay-per-Click" (PPC) advertising and Cost-per-Click (CPC) advertising.

Contextually Targeted Text Ads: Text ads targeted to the subject of writings on web pages, such as news articles and weblogs, using programs such as Google's "AdSense" and Yahoo Search’s "Content Match" programs.

Paid Inclusion: The practice of paying a fee (fee structures may vary) to search engines and similar types of sites (e.g., directories, shopping comparison sites) so that a given web site or web pages may be included in the service's directory, although not necessarily in exchange for a particular position in search listings, such as Yahoo Search’s "Site Match" program, formerly known as Inktomi)

Organic Search Engine Optimization: The practice of using a range of techniques, including augmenting HTML code, web page copy editing, site navigation, linking campaigns and more, in order to improve how well a site or page gets listed in search engines for particular search topics.

Search Engine Marketing (SEM) Service Provider: Agencies or individuals who assist companies with the various search engine marketing practices described above.

Search Engine Marketing Technology Provider: Makers of a software application specialized to assist in the execution of search engine marketing programs, with features such as "bid management," "campaign management," "portfolio management" and "dynamic optimization."

Web Analytics: Using a reporting platform for measuring and analyzing the results of any/all of your online marketing campaigns, including search engine marketing.

PROJECT OVERVIEW


Research Methodology

Radar Research oversaw the following research initiatives as part of this project:

PROJECT OVERVIEW

Extensive analysis of secondary research, reporting and commentary

Development of SEM forecast model

Detailed online survey completed by 553 search engine advertisers and SEM agencies, conducted via IntelliSurvey, Inc.


Key Research Highlights: 2005

SEM was a $5.75 billion industry in North America in 2005, and will grow to $11.1 billion in 2010

Brand awareness is advertisers' top objective for SEM programs, particularly large firms

Organic SEO is the most popular form of SEM, with 4 out of 5 advertisers using this method, with paid placement a close second at 76%

ROI is in line with inflation: Four out of five advertisers say they could afford to pay a mild increase in the price of paid placement, while ¾ of advertisers and all agencies report moderate price hikes this year.

SEM is poaching budget from other marketing channels for the vast majority of advertisers – especially from affiliate marketing and web site development.

Senior executives consider SEM a high business priority with almost half of advertiser respondents (47%) saying that senior management at their companies were "very involved" in SEM programs, especially among companies with fewer than 500 employees

Most advertisers plan to manage the majority of their SEM spending in-house in 2006. SEM agencies will see a significant decline in business as a result.


Key Research Conclusions

Advertisers and agencies are approaching their pricing limits. While most advertisers felt keyword pricing has risen in the past year, four out of five advertisers claimed they could still afford an increase in keyword pricing in 2006. Less than a quarter claimed they were currently at maximum efficiency. Yet even among advertisers who report the capacity to increase their ad expenditure, the vast majority can only absorb increases of less than 30%.

Most advertisers are relying on both paid and organic search strategies. Although most of the SEM budget is allocated to paid search media, strategic SEO is a high priority. To the extent that the search engines can support the legitimate efforts of marketers to get their sites found when relevant to searchers, there is both an opportunity to capture more revenue and better service those business customers.

SEM agencies will have to prove their worth to advertisers. Two-thirds of advertisers report they intend to manage 100% of their SEM initiatives in-house. While this indicates that advertisers are viewing their SEM holistically, it also implies this is a stop-gap measure as the SEM agency marketplace undergoes consolidation and contraction. Agencies must show demonstrable ROI to clients.

Who responded to this survey?


Most Respondents Are U.S. Companies

In total 553 respondents completed the survey

North American firms (U.S. and Canada) made up almost three-quarters of all respondents

Respondents from other countries included Argentina, Australia, Belgium, Canada, Costa Rica, France, Germany, Hong Kong, India, Italy, Netherlands, Norway, South Africa, Spain, Sweden

Other22%

UK6%

U .S .65%

C anada7%

Location of Surveyed Companies

"What country is your company located in?"


Most Advertiser Respondents Have Hands-on SEM Roles

Most advertiser respondents are directly responsible for SEM programs

12% of advertiser respondents are senior managers with little or no hands-on SEM experience but familiarity with and oversight of the programs

4%

19%

3%5%

25%

3%2% 4% 2%14%12%

48%

14% 10%

44%

60%

23%

9%

0%

20%

40%

60%

80%

Sr . ma nage r w ith budgetand s t ra tegy o ve rs ightbut no hands-on SEM

ex per ience

Ma nager ove rs eein g SEM,bu t su bo rd ina tes do most

han ds -on w o rk

Direc tly respon s ible fo rSEM p ro grams

O nly tangen tial SEMre spons iblities

Company is too s ma ll f ors uc h d is tinc tions ; I do it a ll

Oth er

% o

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A ll A dve rtis ers A d ver tis ers o f <500 Emp lo yees A dv er tise rs of 500+ Employ ee s

Personal Role At Company Regarding Search Engine Marketing Programs

"What is your personal role within your company as regards search engine marketing programs?"

Advertisers n=161


Vast Majority of Advertiser Respondents Influence Budget Decisions on SEM Programs

Over a third of advertiser respondents have ultimate budget authority for SEM programs, especially at agencies

Well more than half significantly influence budget decisions on SEM, even if someone else has final sign-off responsibility

4% 4 % 2%9%

3 5%

52 %

5%

48 %4 2%

17 %

62 %

19 %

0 %

20 %

40 %

60 %

80 %

I a m th e u ltimate d ec is ion make r on suc h b ud ge t a llo cat ions

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A ll A d ve rtis ers A d ve rtis ers o f <50 0 Emp loye es A dv er tise rs of 5 00+ Employ ee s

Level of Involvement on Budget Decisions

"What is your level of involvement on budget decisions as pertains to spending on search engine marketing programs?"

Advertisers n=161

What is the size of the SEM industry?


2005 U.S. & Canadian SEM Industry Size Estimate, by Tactic

2005 Advertiser SEM Spending Share of Total Share of Tactic

Paid Placement $4,771,061,673 83.0% Search Media Firms $4,257,875,000 74.1% 89.2% SEM Agencies $137,036,561 2.4% 2.9% In-House $376,150,112 6.5% 7.9%

Paid Inclusion $245,775,760 4.3% Search Media Firms $173,729,826 3.0% 70.7% SEM Agencies $11,500,000 0.2% 4.7% In-House $60,545,934 1.1% 24.6%

Organic SEO $642,994,066 11.2% SEM Agencies $163,897,864 2.9% 25.5% In-House $479,096,202 8.3% 74.5%

SEM Tech $90,357,143 1.6% Leasing $32,775,000 0.6% 36.3% SEM Agencies $32,857,143 0.6% 36.4% In-House $24,725,000 0.4% 27.4%

Total $5,750,188,644


SEM growth will be driven by both its global reach and improved local services

Time

Growth of SEM revenue

Inventory Limits

N. American market maturity

Maximum adv efficiency

Second wave of SMB using SEM

Greater emphasis on branding value

Growth of niche and local SEM

Global growth


SEM Expenditures to Reach $11.1B in 2010

$11.10

$10 .23

$9 .30

$8 .27

$7 .19

$5 .75

$0

$2

$4

$6

$8

$10

$12

2005 2006 2007 2008 2009 2010

(bil

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ns)

Growth will be driven by:– Increased emphasis on branding value of search– Second wave of small-to-mid size businesses using search– Growth of niche and local search– Increase in broadband users– Rising cost per click

Search Engine Marketing Projections, North America 2005-2010

Source: Radar Research Forecast, North America, 12/05


Google, Overture Most Popular Search Media Companies

Google AdWords is the most popular search advertising program, used by 95% of respondents

59% reported using Yahoo’s general "Precision Match" paid placement program

An equal number of respondents (46%)said they used each leader's contextual advertising programs (Google AdSense and Yahoo’s Content Match)

MIVA (formerly FindWhat) was the next most-popular search ad program, followed by AskJeeves, Business.com, Looksmart, and Kanoondle3%

4%

5%

6%

6%

14%

13%

15%

15%

24%

28%

29%

38%

46%

46%

59%

95%

1%

18%

2%

Other

goClick

ePilot

7Search

Lycos Insite Adbuyer

Search123

Mamma

Enhance

Kanoodle

LookSmart

Business

Yahoo! Search Local Match

AskJeeves

MIVA

MSN

Yahoo! Search Site Match (paid inclusion)

Yahoo! Search Content Match

Google AdSense

Yahoo! Search Precision Match

Google AdWords

% of Advertiser Respondents

Most Popular Paid Placement Search Engine Networks Among Advertisers

"Which of the following Paid Placement search engine networks do you run campaigns on?" [Multiple responses applicable]

Advertisers n=123

Advertisers


Brand, Sales, Leads and Traffic Are Top Objects of Paid Placement Programs Among Advertisers Among advertisers, enhancing brand awareness is the top objective of Paid Placement campaigns (albeit by a narrow

margin)

Selling products follows closely as an objective for Paid Placement, especially among smaller firms

Larger firms are more interested in driving leads and traffic via Paid Placement than smaller firms

11 %3 %

3 6%

13% 9 %4%

4 0%

1 7%1 9%

3 7%

5 8%62 % 6 0%

5 4%6 5%

55%

2 %

32 %

77 %

4 9%

70 %

0%

2 0%

4 0%

6 0%

8 0%

To inc re as e /en ha nc e b ra nd

aw a re ne ss of ou rprod uc ts /s erv ic es

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direc t ly o nline

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A ll A d ve rtis ers A d ve rtis ers o f <5 00 Emp loye es A dv er tise rs of 5 00 + Emplo yee s

Purpose of Search Engine Marketing Use

"What is your company using search engine marketing to accomplish?" [Multiple responses applicable]

Advertisers n=161


Site Traffic, Conversion Rate, Click-Thru and ROI are Top Performance Metrics for SEM Programs

ALL RESPONDENTS > GENERAL More than 50% of respondents tracked the following success metrics for the SEM campaigns: site traffic, post-

click conversion, click-thru rate, ROI, cost-per-click, cost-per-action (e.g., sale), and total number of conversions

Agencies were more likely to track all metrics by about a margin of 10% in the case of all metrics

Metrics Tracked To Gauge the Success of SEM Programs

"What metrics do you track / measure / generally pay attention to gauge the success of Search Engine Marketing programs?"

54% 52%47%55%

76%80%

69%62% 60%

39% 41%

71%65%

57% 62%70%74%

80%85%

63%57%

0%10%20%30%40%50%60%70%80%90%

100%

Increased traff icvolume

Conversion rate Click-thru rate Return on Investment Cost per click CPA Total number of onlinesales

% o

f A

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esp

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Total Advertisers Agencies

Total n=553


Senior Executives Appreciate the Value of SEM

Almost half of all advertiser respondents said that senior management at their companies were "very involved" in SEM programs and considered them "a high priority," especially among companies with fewer than 500 employees

Another 37% said senior execs were "moderately aware and interested" in SEM programs; almost half of larger firms agreed with this statement

4%

3 2%

4 9%

9 % 11%6 %9 %

47 %

3 7%

1 0%

33 %

54 %

0%

1 0%

2 0%

3 0%

4 0%

5 0%

6 0%

7 0%

V ery in vo lved ; th ey co ns ider it a high p rior ity

Mo de ra tely aw a re a nd inte re s te d Dimly aw a re a nd inte re s te d a t b es t No t at all

% o

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A ll A dve r tisers A d ver tis ers o f <50 0 Emp lo ye es A d ve rtis ers o f 50 0+ Emp loye es

Extent of Senior Management’s Interest in SEM Practices

"To what extent is your senior management interested in and aware of Search Engine Marketing practices your company engages in?"

RESEARCH HIGHLIGHTS

Advertisers n=168


Organic SEO Most Popular of SEM Programs With Advertiser Respondents

76%80%

40%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

O rganic S E O P aid P lac em ent P aid Inc lus ion

% o

f A

dve

rtis

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esp

on

den

ts

Engagement in SEM Programs

"Do you currently engage in …?" Eight out of 10 advertiser respondents engage in organic search engine optimization

Three quarters engage in paid placement

Less than half engage in paid inclusion

Pricing Trends


Majority of Respondents Shift Budget Away From Other Marketing Programs for Paid SEM Programs

Only 27% of respondents said their funding for paid placement and paid inclusion programs came from newly created budgets, a significant drop from 2004, indicating a growing maturity among advertisers

Most respondents said they were shifting in whole or in part budgets from other marketing programs to fund these new initiatives

1 4%

2 8% 2 8%

38 %

6%12 %

40 %

2 7%22%

4 0%

19 %

2 6%

0 %

10 %

20 %

30 %

40 %

50 %

It is new ly allo cated bu dge ts pec if ic ally f or th es e SEM

p ro grams

It is mo ne y s hif ted aw a yfrom th e b udg ets o f ex is ting

ma rke ting prog ra ms

A c ombina tion of ne w f un dsa nd fu nd s s hif ted f ro m ex is tin g

marketin g p ro grams

Not app lic ab le; w e d o n ote nga ge in the se tw o typ es

o f prog ra ms

% o

f A

dv

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ser

Res

po

nd

ents

A ll A dv er tise rs A d ve rtis ers o f <5 00 Emp loy ees A d ve rt is ers of 50 0+ Employ ee s

Source of Budget for Paid Placement and Paid Inclusion Programs

"Where is the budget coming from for your Paid Placement and Paid Inclusion programs?"

Advertisers n=161


Majority of Respondents Shift Budget Away From Other Marketing Programs for Organic SEO Only 30% of respondents said their funding for organic search engine optimization programs came from

newly created budgets, again dropping from last year

Most respondents said they were shifting in whole or in part budgets from other marketing programs and/or web development budgets to fund these new initiatives

4%

9%13%

10%

2%

11%

28%

17%21%

11%9%

11%

4%9%

12%16%

30%

19%14%

19%

31%

0%

10%

20%

30%

40%

50%

It is new ly allo catedbudget spec if ica lly

fo r these SEMpro grams

A combinatio n o f new f unds an d

fund s s hif ted f rom ex is ting marketing

budgets

It is mone y s hif tedaw ay f rom th e

budge ts of ex is tingmarke ting prog rams

A combinatio n o f new

f un ds , p lus budge tsshif ted f rom ex is ting marketing and f rom

w e b s ite devprog rams

A c omb ina tion of newf un ds and f un ds

shif ted f rom ex is t ingw eb s ite deve lopmen t

budge ts

It is mone y shif ted aw a y f rom bud ge tsof e x is t ing w eb s ite

deve lopment prog rams

No t applicable ; w e dono t eng age in Organ ic

Sea rc h Eng ine Op timiza tion

p ro grams

% o

f A

dv

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ser

Res

po

nd

ents

A ll A dv er tise rs A dve rt isers of <5 00 Employ ees A dv er tise rs of 5 00+ Employ ees

Source of Budget for Organic Search Optimization Programs

"Where is the budget coming from for your Organic Search Optimization programs?"

RESEARCH HIGHLIGHTS

Advertisers n=161


SEM Is Poaching Budget From Established Marketing Program

The biggest shares of budgets for SEM programs are being shifted away from web development, affiliate marketing, email marketing, yellow pages, TV and direct mail.

Shift of Marketing / IT Funds to Search Marketing Programs

"From which marketing/IT programs are you shifting budget away and moving it to your search marketing programs?"

RESEARCH HIGHLIGHTS

Advertisers n=28

50%

4%

4%

4%

4%

4%

4%

4%

4%

7%

7%

7%

7%

11%

11%

0% 20% 40% 60%

Other

Point-of-sale promotions

Conferences and exhibitions

Telemarketing

Coupons

Online yellow page advertising

Web graphical display advertising

Print magazines advertising

Print newspaper advertising

TV advertising

Direct mail

Email marketing

Print yellow page advertising

Web site development

Affiliate Marketing


Paid Placement Prices Have Risen Moderately

Changes in Paid Placement Prices Compared to Last Year

"Have you observed prices for Paid Placement ads change in the last year for the keywords you routinely bid on?"

Advertisers n=123; Agencies n=229

23%

15%

20%

15%

10%

7%

4%

0% 0% 0%

6%

0%0%

25%

32%

26%

6%7%

1%0%

1%0%

3%1%

0%

5%

10%

15%

20%

25%

30%

35%

Don'tknow

10%more

20%more

30%more

40%more

50%more

60%more

70%more

80%more

90%more

Twiceas much

Morethantwice

Advertisers

Agencies

Advertisers and agencies are experiencing similar trends in overall pricing

Over three-quarters of advertiser respondents felt that prices for their common keywords rose in the past 12 months; 100% of agencies thought prices went up

Nearly a quarter of advertisers do not know whether they are paying more for paid placement in 2005 versus the previous year


Faced With Escalating Keyword Prices, Advertisers Would Increase Program Efficiency

0%1 0%2 0%3 0%4 0%5 0%6 0%7 0%8 0%9 0%

Try toimprov e s ite'sef f ic ien cy atc on ve rtin g *

Try to improv eou r b id mgmt

p ro grams

Shif t mo rebu dg et to

n ic he se archad ne tw orks

Gr in a nd be arit; w e ca n s tillaf fo rd to pa y

mo re

Inc re as e th en umb er o fke yw o rd sw e bid on

De crea seb ud get f or Pa id

Plac ement

Rely more o nmore

s op his t ic ate dsof tw a re

Re ly les s ono uts ide SEM

ag enc ies

Rely more onou ts id e SEM

a ge nc ie s

Sup ple men tc os t f ro m

b ra nd bu dg ets

Ce as e PaidPlac eme ntprog ramsa ltog eth er

% o

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A ll A dv er tise rs A dv er tise rs of <50 0 Emplo ye es A dve rt is ers of 50 0+ Employ ee s

Reaction to 2-Year Steady Increase in Paid Placement Costs

"How would you likely react to hypothetical scenario where the cost of Paid Placement steadily increased for the next two years?"

Paid placement advertisers would address price rises by improving the efficiency of their programs before cutting back on spending

Improving site conversion efficiency and improving the overall efficiency of bidding programs would be first steps in maintaining paid placement programs intact

Larger firms more likely to assign branding value to their search programs than smaller firms

Advertiser: n=123


Most Advertiser Respondents Could Still Tolerate Further Price Rises, at Moderate Levels Four out of five respondents said they could tolerate further rises in paid placement prices

21% report they cannot afford to pay more for leads/conversions because they are currently at maximum efficiency.

Even among advertisers who report the capacity to increase ad expenditure, the vast majority can afford 30% or less.

Despite increasing ad spend and year-to-year growth in the value of search engine marketing, we are likely nearing a pricing plateau as advertisers near their maximum efficacy.

1%6%

1%2%

11%

0%0%0%1%

19%21%18% 17%

4%

0%

10%

20%

30%

Nothing;maxed out

already

10% more 20% more 30% more 40% more 50% more 60% more 70% more 80% more 90% more Tw ice asmuch

Threetimes as

much

Four timesas much

More thanfive timesas much

% o

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Ability to Afford Further Price Escalation in Paid Placement Ads

"Given the current efficiency you experience with Paid Placement programs, and the quality of the leads that this tactic generates, how much more could you afford to pay for the leads / conversions this channel provides before you could not justify the expense?"

Role of agencies


Majority of 2006 Paid Placement Spending Will Be Managed In-House, Not Outsourced to Agencies

Two-third of advertiser respondents said they plan manage all of their 2006 paid placement spending in-house; larger firms were more likely to outsource more of their campaign budgets

Only 13% of advertisers plan to outsource more than half of their paid placement expenditures in 2006.

3%1%5%

1% 2% 3%0%

6%2%4%3%1%

3%9%

65%

6%1%

4% 2% 0%

69%

9% 7% 6%6%6%0%

6%3%

9%

53%

3% 3%0%

20%

40%

60%

80%

100% in hous e

90% in house

80% in hous e

70% in hous e

60% in house

50% in house

40% in hous e

30% in house

20% in house

10% in hous e

100% v iaSEM se rv ice

p rov ide r

% o

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A ll A dve rt is ers A dv er tise rs of <500 Employees A dv er tisers of 500+ Employ ees

Management of Planned 2005 Paid Placement Spending

"How much of your planned spending next year (2006) for Paid Placement programs are you likely to manage with in-house resources versus through an external search engine marketing service provider?"

Advertisers n=122


3%3% 1% 2% 0% 3%10%

3%3%3%0%2%

10%

64%

9%2% 1% 2%1% 0%

69%

9% 9%3%3%8%

0%5%8%

13%

51%

0% 0%0%

10%

20%

30%

40%

50%

60%

70%

100% in house

90% in hous e

80% in house

70% in house

60% in house

50% in house

40% in hous e

30% in house

20% in house

10% in hous e

100% v iaSEM se rv ice

p rov ide r

% o

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A ll A dve rt isers A dv er tise rs of <500 Employ ees A dve rt is ers of 500+ Employ ees

Management of Planned 2006 Organic Search Engine Optimization Spending

"How much of your planned spending next year (2006) for Organic Search Engine Optimization programs are you likely to manage with in-house resources versus through an external search engine marketing service provider?"

Majority of 2006 Organic SEO Spending Will Be Managed In-House, Not Outsourced to Agencies Like paid placement, nearly two-thirds of advertiser respondents said they plan to manage all of their 2006

organic SEO spending in-house; larger firms were more likely to outsource more of their campaign budgets

Only 11% of advertisers plan to outsource the majority of their organic SEO spending in 2006

Advertisers n=129


Management of Planned 2006 Paid Inclusion Spending

“How much of your planned spending next year (2006) for Paid Inclusion programs are you likely to manage with in-house resources versus through an external search engine marketing service provider?”

Majority of 2005 Paid Inclusion Spending Will Be Managed In-House, Not Outsourced to Agencies Like paid placement and organic SEO, two-thirds of advertisers said they plan to manage all of their 2006 paid inclusion

spending in-house; larger firms were more likely to outsource more of their campaign budgets

The consistency in the data suggests an opportunity for agencies, if they can prove their value-add to clients. Agencies must prove that they can provide superior service in contrast to an advertiser bringing SEM in-house.

3 %2 % 4%0% 2%

7%

16%11 %

6%2%0 % 0%

5%

66 %

3% 2% 3 % 2 %5%0 %

7 0%

7% 4 %

2 1%

0%5%

0% 0%0 %0 %

5 8%

0% 0%0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

10 0% in h ou se

90 % in h ous e

8 0% in h ou se

70 % in ho us e

60 % in h ou se

50 % in ho us e

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3 0% in h ou se

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A ll A dv er tise rs A d ver tis ers o f <50 0 Emp lo ye es A dv er tise rs of 5 00 + Emplo ye es

Advertisers n=65

The click fraud problem


Advertisers and agencies are becoming increasingly concerned about click fraud

Nearly 2 out of 5 advertisers and nearly half of agencies have tracked fraud; 16% of advertisers say it's serious, nearly triple from 2004

Yet a quarter do not believe it's a problem

A third of advertisers and a third of agencies are concerned but not tracking fraud

27%

0%

16%

33% 33%

18%

0%

23%16%

35%

25%

2%

18% 21%

34%

18%

38%

29%

9%6%

0%

10%

20%

30%

40%

50%

60%

This is a s ign if ic ant prob lem w ehav e t racked

It is a moderate prob lem w ehav e t racked

We have no t t racked it muc h,bu t w e are w or ried about it

It is no t a s ign if ic ant conc ern Neve r hea rd of it bef ore% o

f A

dv

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ser

Res

po

nd

ents

A ll A dver tis ers A dver tise rs o f <500 Emp loyees A dve r tisers of 500+ Employ ees A genc ies

Click Fraud vs. Paid Placement

"In your experience, how much of a problem is "click fraud" with regard to Paid Placement?"

RESEARCH HIGHLIGHTS



Over 2 out every 5 advertisers and half of all agencies have been a victim of click fraud

Over 40% of advertisers claim they’ve been a victim of click fraud and more than half of agencies.

Nearly 1/3 of advertisers do not know if they’ve been a victim of click fraud

51 % 49 %

0 %

3 8%42 %

2 1%

3 6%

1 8%

46 %

32 %27%

36%

0 %

10 %

20 %

30 %

40 %

50 %

60 %

Y es No I d on't kno w

% o

f A

dve

rtis

er R

esp

on

de

nts

A ll A dv er tise rs A dv er tise rs of <50 0 Emplo yee s A d ve rtis ers o f 50 0+ Emp loy ees A ge nc ie s

Prevalence of Click Fraud

"Have you been a victim of click fraud?”

RESEARCH HIGHLIGHTS



Competitive click fraud is less of a problem than publishers, networks and affiliates attempting to artificially inflate their clicks

More than three-quarters of advertisers claim their click fraud was due to publishers, networks or affiliates attempting to increase their revenue through non-authentic clicks

However, more than half also claim they have been a victim of competitive click fraud as well

41%

59%53%

78% 78%

53% 55%

82%

0%

10%20%

30%40%

50%60%

70%80%

90%

Competitiv e Click Fraud Publishe rs o r netw orks a ttempt ing to in f late rev th ru non-au thent iv e c licks

% o

f A

dve

rtis

er R

esp

on

de

nts

A ll A dv er tise rs A dve r tisers of <500 Employ ees A d ver tise rs o f 500+ Emp loyees A genc ies

Type of Click Fraud

"What type of click fraud did you experience?”

RESEARCH HIGHLIGHTS



Majority of advertisers and agencies have received an incremental credit for click fraud

Nearly 80% of advertisers who have been a victim of click fraud have received an incremental credit from an engine

Agencies are far more proactive than advertisers in initiating credit requests from search engines

Engines tend to initiate credit for advertiser

72%

29%

22%

78% 78%

22%18%

82%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Y es No

% o

f Adv

ertis

er R

espo

nden

ts

A ll A dve rt isers A dvert is ers of <500 Employ ees A dv er tise rs o f 500+ Employees A gencies

Compensation for Click Fraud

"Have you ever received an incremental credit from a paid search provider for click fraud?”

RESEARCH HIGHLIGHTS


Initiation for make-good

"Was it based on your request or was the credit engine initiated ?”

60%

41%

60%

40% 39%

61%56%

44%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Based on y ou r request Engine Initia ted

% o

f A

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Res

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ents

A ll A dv er tise rs A dver tisers of <500 Employ ees A dver tise rs o f 500+ Emp loyees A gencies


Advertisers report mixed results for their satisfaction level with their agencies

Just one thirds (33%) of respondents said they were happy ("moderately" or "very") with their SEM agencies for paid placement campaigns, down from 62% last year

A quarter of respondents are unhappy (“moderately” or “very”)

Over 2/5 of advertisers report “mixed results” when asked for their satisfaction level

23%

2%

19%

14%

42%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

V ery happy Moderate lyhappy

Mixed res ults Modera telyunhappy

V e ry unhappy

% o

f A

dv

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ser

Res

po

nd

ents

Opinion on SEM Service Providers

"How happy have you been in the past year with the services delivered by the primary SEM service provider you engage for Paid Placement programs?"

ADVERTISERS > PAID PLACEMENT

Advertisers n=43

The rise of local search


High Interest in Locally Targeted Search

ALL RESPONDENTS > GENERAL

Nearly a quarter of respondents (mostly agencies) have tried locally targeted search ads and think "it works great"

Almost a third had tried them and thought "it works okay"

Only 13% had tried them and were "not impressed"

More respondents had tested local search than not, particularly agencies

Level of Experience or Interest in Locally Targeted Search Keyword Text Ads

"What is your level of experience or interest in the following search marketing tactics: Locally Targeted Search Keyword Text Ads"

11%11%

23%

12% 1 1%1 6%

2 7%2 9%

3 6%

1 3% 11 %7%

4%

3 1%

2 3%

13% 1 1% 10%

0%

1 0%

2 0%

3 0%

4 0%

5 0%

Tr ie d it , w orks grea t Tr ied it, w o rks o kay Tr ied it, u nimp re sse d No exp er ien ce , bu t v eryinte res ted

No ex pe rien ce , b utso mew hat inte res te d

No ex pe rien ce , n otin teres ted

% o

f R

esp

on

de

nts

A ll Re spo nd en ts A d ve rtis ers A g en c ies


Not surprisingly, Google and Yahoo! Search dominate local search

Google AdWords Local Targeting is the most popular local search advertising program, used by 79% of advertiser respondents, 83% of agencies

53% of advertisers reported using Yahoo! Search’s Local Match paid placement program

Agencies are more likely to spend with the established search players for local targeting, while advertisers are more willing to spend with yellow page providers for local targeting

27 %32%

53%

79%

9% 6%

18% 16%

34%

67%

83 %

21%

9%

27%

% o f A d ve r tis e r Re s p o nd e n ts

A dv er tise rs A ge nc ie s

Most Popular Local Search Engine Networks Among Advertisers

“Where have you bought inventory for local search marketing?" [Multiple responses applicable]



About the Research Partners

About the Search Engine Marketing Professional Organization (SEMPO)

SEMPO is a non-profit professional association working to increase awareness and promote the value of search engine marketing worldwide. The organization represents the common interests of more than 315 companies and consultants worldwide and provides them with a voice in the marketplace. For more information, or to join the organization, please visit www.SEMPO.org

About Radar Research, LLC

Radar Research is a Los Angeles-based research and consulting firm aimed at the nexus of media, technology, culture and commerce. It was founded by two former JupiterResearch analysts, Marissa Gluck and Aram Sinnreich. Radar conducts research on behalf of both corporate clients and non-profit organizations, such as DoubleClick, Sony Pictures Entertainment, Nielsen//Netratings, the Online Publishers Association and The Norman Lear Center. For more information, please visit www.radarresearch.com

About IntelliSurvey, Inc.

IntelliSurvey helps organizations, including leading research firms and in-house researchers, make better business decisions by gathering intelligence from their customers, members, and prospects. For more information, please visit www.IntelliSurvey.com

survey of advertisers and agencies search engine marketing professional organization (sempo)...

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