Growth of SEM and PPC Advertising, 2004-2010

Search Engine Marketing

The Search Engine Marketing Professional Organization (SEMPO) in partnership with Econsultancy has published the SEMPO Annual State of Search Survey since 2004. The report highlights all search engine marketing (SEM) advertising expenditures in the U.S.A. and Canada in the categories of paid placement, paid inclusion, organic search engine optimization (SEO) and through SEM technology providers.

The compound annual growth rate for total SEM advertising spending is 26.30 percent for the 2004-2010 period, with total advertising spending ranging from $4.09 billion in 2004 to an estimated $16.6 billion in 2010. The compound annual growth rate for the paid placement category (pay-per-click advertising) is 27.97 percent for the same period, with total advertising spending ranging from $3.34 billion in 2004 to an estimated $14.67 billion in 2010. Since 2004, the average percent of total SEM advertising made up by paid-per-click advertising is 85.28. The percent of total SEM advertising attributable to pay-per-click advertising is increasing annually, most recently to 88.375 in 2008 (the figure used to estimate total paid placement advertising in 2009 and 2010).

Graphs for total expenditures and the annual growth rate of both SEM advertising and paid placement (pay-per-click) advertising are presented below, as is the annual percent of total SEM advertising attributable to pay-per-click advertising.

SEM Advertising Spending

SEM Advertising Growth

PPC Advertising Expenditures

PPC Advertising Growth

PPC as a percent of total SEM ad spending

According to the reports, Google dominates the paid placement advertising market. It will be interesting to see the impact of Facebook’s advertising platform and Twitter’s developing advertising platform on both Google’s total market share in pay-per-click advertising and the annual expenditures and growth rate of paid placement advertising. My assumption is that the addition of Facebook and Twitter to the paid placement landscape translates to greater than normal growth in this category over the next three to five years. The question is, will it be enough of an expansion to reverse the declining annual growth in both the SEM advertising and paid placement advertising categories?

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One thought on “Growth of SEM and PPC Advertising, 2004-2010”

  1. Hi Professor, this is Yuanyuan Zhang, Year 2002 MBA student in your class. I like your classes, your unique insights and your blogs. Thanks for sharing! Have a nice weekend!

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