What is Search Engine Marketing?
U.S. ad industry revenue is expected to be $363 billion in 2023, and rise another 4.3% in 2024, excluding political advertising spend, according to a report from industry analyst Brian Wieser. Of that total 32.5%, approximately $118 billion, will be spent on Search Engine Marketing, SEM. Assuming the chart below is accurate at year-end, paid search advertising alone will exceed the combined dollars spent on TV, Radio, Out of Home, and Print by nearly $25 billion.
Paid search advertising, also referred to as sponsored ads, search marketing, search engine marketing, pay-per-click marketing, and cost-per-click marketing displays ads in search engine results when someone searches for products or services.
SEM has become such a predominant form of paid advertising that there are now subsets of search engine marketing – paid, local, voice, image, shop, and social search.
To keep the lines clear, search engine optimization, SEO, is the process of improving the quality and quantity of traffic to a website from search engines for unpaid traffic, known as "organic" results rather than paid search, SEM. Increasing SEO requires an investment of time and effort, but once a website begins to rank high, the search results and subsequent traffic directed to a web page come at no charge, the only hard cost is the original investment of time. On the other hand, SEM advertisers are paying for each click.
The two charts below show the total share of searches and the total share of paid search dollars spent.
This is in no way intended to be a knock on Google but those already overly competitive search dollars may prove a bit more effective with a bit of proportional search spending. While Google has remained more or less flat in terms of share of search, Microsoft has almost doubled its share over the same time period. Does 60% share of search justify almost 90% of the dollars? It would appear as though it does.
Pay-per-click advertisements were the original search advertising. In 1998, Google introduced an auction based PPC model. The highest bidders would appear at the top of the search results, and lower bidders would appear further down. Sound familiar.
A few SEM statistics:
$9,000 to $10,000 per month is the amount the average PPC campaign costs for small to mid-sized companies.
72% of companies haven’t looked at their ad campaigns in over a month.
65% of small to mid-sized businesses have a PPC campaign.
59% say they research a product online first, before purchasing.
47% of the total global purchases are completed online.
39% of ad budgets are spent on search media.
32% of companies use PPC to sell products directly to consumers.
Paid search won’t be going away any time soon. It has clearly found its place in the stats above, but does it really warrant 39% of your total advertising budget in an already overcrowded and highly cost-competitive channel? If your answer is yes, at the very least it, and your brand, deserves to be monitored as closely as any other form of media you allocate your advertising budget to. If not, perhaps a reallocation of dollars towards a more “well rounded” multi-channel campaign would be not only more cost-effective, but the results may surprise you!