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Record Performance for Search Marketing in 2006

Unprecedented Increase in Total U.S. Search Marketing Revenue

February 19, 2007 (Kevin Newcomb, SEMPO) North American advertisers spent $9.4 billion on search engine marketing (SEM) in 2006, up 63 percent over the $5.75 billion spent on search in 2005, and beating last year's estimate of $7.2 billion. Spending is projected to grow to $18.6 billion by 2011 in North America, driven by strong advertiser demand, rising keyword pricing and cost per click, a second wave of small-to-midsized businesses discovering the efficacy of search and better search technology. That's a significant increase from last year's projection of $11.1 billion in 2010.

Out of the total 2006 spend, $8 billion, or 86 percent of that going to paid search, and $1.1 billion, or 12 percent of overall spending to search engine optimization (SEO). Spending on SEM technologies, including leasing, agency solutions and in-house development, accounts for 1.3 percent of overall spending, or $122 million; and paid inclusion accounted for 1.0 percent of spending, or $94 million.

More than a third of advertisers (36 percent) report their funding for paid placement programs and organic SEO came from newly created budgets in 2006. The good news for search marketers is that search marketing is now poaching budget from offline marketing channels, instead of fighting for a share of the much smaller online budgets. Hardest hit was print magazine advertising, with 20 percent of respondents reporting a shift; followed by direct mail at 16 percent; TV advertising at 13 percent; and print newspaper advertising at 13 percent.

Microsoft is gaining on Google and Yahoo, with 68 percent of respondents using MSN last year, up dramatically from the 29 percent of respondents doing so in 2005. Google AdWords continues to dominate, and is used by 96 percent of respondents. Yahoo was the second most popular search advertising program, with 86 percent of respondents participating.

The industry-wide survey of 587 respondents was conducted by Radar Research and Intellisurvey in November and December 2006.

About EngineWorks®

EngineWorks is an innovative online search engine marketing (SEM) services company headquartered in Portland, Oregon. The firm provides sophisticated SEM services that enhance the design and performance of commercial Web sites. Proprietary Search Engine Optimization (SEO) strategies improve the attractiveness of Web sites to search engine algorithms, resulting in highly ranked search listings throughout the world's most important engines and directories. Professional Paid Search Marketing campaigns deliver online customers through popular Pay-Per-Click (PPC) and Paid Inclusion engines. Finally, Social Media Marketing (SMM) services leverage conversational marketing through emerging social networks, blogs, and online communities to increase the volume and richness of two-way communication pertaining to your brand. EngineWorks is located at www.engineworks.com.

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