SEM Pays Off Despite Cost Hikes

The cost of search engine keywords increased 26% in 2004, according to a survey of 288 search engine advertisers and agencies conducted on behalf of the Search Engine Marketing Professional Organization (SEMPO). Yet respondents said that on average prices could rise another 33% before search engine marketing (SEM) would fail to be profitable.

Among other survey results, 59% of advertisers said that the funds for their SEM expenditures came from the budgets of other marketing programs. The plurality of funds were shifted from paid listings on shopping directories, followed by e-mail programs, Web display ads, and newspaper and magazine ads. Brand awareness was the primary goal of advertisers’ SEM efforts, though sales and lead generation were close behind.

Looking ahead, advertisers said they expect to spend 39% more on SEM (including organic search as well as paid placement) in 2005 than they had this year.

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