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Marketing Sherpa – Search Marketing Benchmark Guide 2008

Search Marketing Benchmark Guide 2008

2,475 search marketers surveyed
184 charts & tables +10 eyetracking heatmaps
711 search marketing agency execs and staff surveyed
Stats on costs per click, conversion rates, SEO vs. PPC, and more
Growth rates and ROI of search marketing vs. other marketing tactics
Click here to download Executive Summary

With the search marketing industry expanding nearly 40% globally, facts, tactics and trends changed rapidly over the last 12 months. Don’t assume today’s information is the same as last year’s – it’s not! Stay ahead of your competition and learn what works and what doesn’t in Search Marketing for 2008.

MarketingSherpa’s Search Marketing Benchmark Guide 2007-2008 is the fourth annual edition, and has been completely re-researched and rewritten to accurately reflect today’s search marketing landscape. This real data can only help companies better plan their 2008 budgets and forecast results.

New Research Highlights
The over 3,000 search marketers surveyed provide top 5 insights for 2008. Find out:

What you can expect to spend on Search Marketing in 2008.
How consumers really look at Web-based content and advertsing. Does URL length affect viewing and content?
How search ROI stacks up against other tactics.
247 real life marketers explain the challenges they faced in bring Search engine marketing in-house.
A new way to evaluate clicks and click fraud.
MarketingSherpa’s Benchmark Guide has relevant data for small, medium and large companies.
Real-life results based on varying budgets and tests.
How the world searches and shops.
Tactical spending changes for 2008.
B-to-B and B-to-C data.
Trends of online advertising in relation to. traditional marketing.
The relationship between SEO and Public Relations.
Rating the top search properties.
The real issues of click fraud.
How search ROI stacks up against other marketing.
The true averages of CPC in the major search engines
The 2007-2008 edition is our biggest ever, with 275 fact-filled pages complete with 184 charts & tables, 10 heatmaps and analysis that can help you:
Evaluate your budgets in relation to real-world spending
Justify and defend your PPC and SEO budgets
Forecast results – including clicks, conversion and costs – more accurately
Discover practical tips on measurement
Select result-driven SEM tests
Train new staff more easily
Your new Benchmark Guide includes 3 Special Reports:
Challenges to In-House SEM We surveyed 247 marketers who brought their SEM in-house about their successes and failures. They reveal how complicated the transition is from out-sourcing to going in-house, and how long it takes to be up and running. We also found out why it’s so hard to find good search employees.

Eyetracking Study of Search Ad Position and Relevance This new eyetracking study focuses on ad relevance, position and URL length. We recruited business professionals to evaluate a web visitor’s behavior and attention in relation to ad relevance and ad position. These professionals also provide insight into how the length of a URL affects viewing and action.

Under the Hood of Ranking Toolbars There are three toolbars that measure traffic and other factors to determine a web site’s popularity, standing and trustworthiness. This special report reveals their reliability and limitations, how their systems operate, how traffic is counted and how data might be affected.

Hundreds of questions answered with the Search Marketing Benchmark Guide. Here are just 10:

Am I budgeting enough or too much for SEM in relation to the rest of my marketing budget?
What is the real impact of landing pages on conversions?
What’s the first thing consumers do when they land on a retail site?
How can a change in my internal search engine improve my site’s conversion rate?
How are merchants policing affiliates and search?
Why would I want to bring SEM in-house and why would I want to continue to outsource it?
If I want to do business in China or India, is click fraud something I should worry about? Also is it important to translate my site?
What should my conversion rate be for PPC vs. SEO listings?
What do mobile internet users search for?
What do customers do after viewing a video online?

Table of Contents
Editor’s Note
New Research Highlights

Chart I: Expected Search Spending for 2008
Chart II: How Search ROI Stacks Up Against Other Tactics
Chart III: Difficulty in SEM Staffing Rated by Job Function
Chart IV: A New Way to Evaluate Clicks and Click Fraud
Eyetracking Heatmap: Impact of Long URL Length on Ad Viewing

Glossary
Chapter 1: The Business of Search – Budgeting, Issues & Outsourcing Search

Chart 1.1: 2006-2008 Search Spending
Table 1.2: Online Advertising – 2006 Spending Breakdown
Chart 1.3: Online Advertising Slowly Overtaking Traditional Tactics
Chart 1.4: Tactical Spending Changes for 2008 – PPC on Google
Chart 1.5: Tactical Spending Changes for 2008 – PPC on Top Tier (Yahoo!, MSN, AOL & Ask)
Chart 1.6: Tactical Spending Changes for 2008 – PPC on 2nd Tier
Chart 1.7: Tactical Spending Changes for 2008 – SEO
Chart 1.8: SEO Spending as % of Paid Search 2007
Chart 1.9: B-to-C SEM Budget Percentages – $50,000 Marketing Budget
Chart 1.10: B-to-C SEM Budget Percentages – $300,000 Marketing Budget
Chart 1.11: B-to-C SEM Budget Percentages – $1.3 Million Marketing Budget
Chart 1.12: B-to-C SEM Budget Percentages – All Budgets Over $1 Million
Chart 1.13: B-to-B SEM Budget Percentages – $75,000 Marketing Budget
Chart 1.14: B-to-B SEM Budget Percentages – $250,000 Marketing Budget
Chart 1.15: B-to-B SEM Budget Percentages – $1.2 Million Marketing Budget
Chart 1.16: B-to-B SEM Budget Percentages – Average of Budgets Over $1 Million

Challenges in SEM

Chart 1.17: Agency Pros Rank SEM Challenges
Chart 1.18: Marketers Rank SEM Challenges by Size of Business Targeted
Chart 1.19: High Volume and Large Budget Marketers Rank SEM Challenges

Special Report: Challenges to In-House SEM

Chart 1.20: Reasons for Bringing SEM In-House
Chart 1.21: Advertiser Happiness with Paid Placement Services’ Providers
Chart 1.22: How Long Before In-House SEM is Up and Running?
Chart 1.23: Difficulty in SEM Staffing Rated by Job Function
Table 1.24: Issues in Staffing – Agencies’ View
Chart 1.25: Staffing Challenges Compared to Other Issues in SEM
Chart 1.26: Many Hats – the Roles of Search Marketers
Table 1.27: Why Search Marketers are Mobile (Salaries and Demand)
Table 1.28: Why Search Marketers are Mobile 2: The Impact of Experience

Search Marketing Agencies

Chart 1.29: Use of Paid Search Vendors 2006-2007
Chart 1.30: Use of SEO Vendors 2006-2007
Chart 1.31: Use of SEM Vendors 2006-2007 – Marketers Spending Less Than $10,000
Chart 1.32: Use of SEM Vendors 2006-2007 – Marketers Spending More Than $25,000
Table 1.33: Agency Pros Speak Out – Issues and Opportunities in SEM

Click Fraud

Table 1.34 : Trends in Click Fraud
Chart 1.35: How Many Marketers Identify Click Fraud?
Chart 1.36: Reported Click Fraud Levels 2006 vs. 2007
Chart 1.37: A New View of Click Fraud
Definitions of some of the click fraud metrics used in the scoring of clicks
Chart 1.38: Click Fraud Estimates 2006-2007
Chart 1.39: How Marketers Identify Click Fraud?
Chart 1.40: How Will Click Fraud Be Resolved? 2006 vs. 2007
Chart 1.41: How Will Click Fraud Be Resolved? Big vs. Average Spenders

Top Search Advertisers

Table 1.42: Top Sponsored Link Advertisers by Exposures
Table 1.43: Sponsored Link Advertising by Industry

Chapter 2: Topics in Search

Special Report: Eyetracking Study of Search Ad Position and Relevance

Heatmaps Explained

Experiment One: Relevance in Listings

Relevance of text descriptions
Heatmap 2.1: Scanning of Relevant and Non-Relevant Text Ads
Heatmap 2.2: Example of Scanning on Relevant Listings
Heatmap 2.3: Example of Scanning on Non-Relevant Listing
Non – Relevant Listings and Their Effect on Scanning
Conclusions

Experiment Two: Side-listed Ads – Impact of Relevance and Position

Heatmap 2.4: Side-Sponsored Ad in First Position
Heatmap 2.5: Side-Sponsored Ad in Third Position
Heatmap 2.6: Side-Sponsored Ad in Fifth Position
Analysis
Conclusions

Experiment Three: Position Length of URL

Length of URL strings as they appear in search listings
Heatmap 2.7: Test Listing with Short URL
Heatmap 2.8: Test Listing with Long URL
Heatmap 2.9: Click Patterns on Test Listings – Short vs. Long URL Strings
Table 2.10: Time Spent with Listings by URL Length
Heatmap 2.11: Impact of Long URL Length on Subsequent Ad Viewing

Related Findings: PPC Advertising – the Relevance of Relevance

Case Study 1
Case Study 2

Business/Vertical Search

Chart 2.12: Search Engines Used by Business Technology Buyers
Chart 2.13: Search Engines ‘Used Most Frequently’ by Technology Buyers
Chart 2.14: Business Searchers Often Can’t Locate Info via Search
Notes from the Field: How to Lower Costs for B-to-B Leads

Contextual Advertising

Chart 2.15: Contextual CPC for Google AdSense
Chart 2.16: Contextual CTR for Google AdSense

Local Search & Pay per Call

Chart 2.17: Tactical Spending Changes for 2008 – Local Search
Chart 2.18: Local Online Spending 2002-2007
Chart 2.19: Ad Spending in Local Media, Online vs. Traditional
Notes from the Field: Running Ads in Google Local vs. Main Google Search

Mobile Search

Chart 2.20: Mobile Search Engine Use
Chart 2.21: Mobile Internet Use by Country
Chart 2.22: What Mobile Internet Users Search for
Table 2.23: Mobile Video Revenue Share 2006 vs. 2007
Table 2.24: Mobile Browser Market Share

SEO & Public Relations

Table 2.25: Top 25 News Web Sites for June 2007
Chart 2.26: Tactics in Optimizing Press Releases 2006-2007
Chart 2.27: Measuring Success in Optimizing Press Releases 2005-2006

The Second Tier of Search Properties

Chart 2.28: Use of 2nd-Tier Search Properties for Marketing
Chart 2.29: Use of 2nd-Tier Search Properties – Average vs. Big Spenders
Table 2.30: Agency and Marketer Comments on 2nd-Tier Experience
Table 2.31: Keyword Prices – Comparing the 1st & 2nd Tier
Chart 2.32: Total Searches for June 2007 – 2nd-Tier Search Properties
Chart 2.33: Share of Searches for June 2007 – 2nd-Tier Search Properties
Chart 2.34: Unique Searchers for June 2007 – 2nd-Tier Search Properties
Chart 2.35: Penetration for June 2007 – 2nd-Tier Search Properties
Chart 2.36: Searches per Searcher for June 2007 – 2nd Tier Search Properties
Chart 2.37: Sessions per Searcher for June 2007 – 2nd-Tier Search Properties

Profiles of 2nd-Tier Engines

Table 2.38: Selected Search Properties’ Comparison 1 – Setup and Bidding
Table 2.39: Selected Search Properties’ Comparison 2 – Ad-Targeting Options

Profiles of Selected 2nd-Tier Search Providers

Search123 Inc. (division of ValueClick Inc.)
LookSmart
Mamma (division of Copernic Technologies Inc.)
Superpages.com (division of Idearc Inc.)
Lycos
Business.com
Yesup (Powered by sister company Clicksor.com)
Epilot (A subsidiary of Local.com)

How We Search and Shop

Table 2.40: Top 100 U.S. Product/Retail-Oriented Search Terms June 2007
Chart 2.41: Word Count in Search Phrases – U.S. Searchers
Chart 2.42: Impact of Complimentary Paid and Natural Search Listings
Table 2.43: Top U.S. Search Terms – IT and Internet
Table 2.44: Top U.S. Search Terms – Internet Advertising
Table 2.45: Top U.S. Search Terms – Net Communities and Chat
Chart 2.46: How Far Do Searchers Delve Into Results?
Chart 2.47: Online Shopping and Product Research Are Ordinary
Chart 4.48: How Do Online Shoppers Find New Retailers?
Chart 2.49: Search’s Impact on Traffic by Product Category
Chart 2.50: Share of Retail Referrals from Search
Chart 2.51: Share of Referrals – Specialty Home Category
Chart 2.52: First Step in Product Research – Electronics Example
Chart 2.53: Share of Retail Searches and Clickthrough
Chart 2.54: Shopping Engines Compared – Search Agencies Rate ROI
Chart 2.55: Tactical Spending Changes for 2008 – Shopping Search
Table 2.56: Shopping Sites – Required Feed Attributes
Table 2.57: Shopping Site Capabilities

Special Report: Under the Hood of Ranking Toolbars

Alexa
Compete Toolbar
Third-Party Services
TrustGauge/BrowserAccelerator
Other Popular Toolbars

Video & Search

Table 2.58: Market Share of Top Video Properties
Table 2.59: Top U.S. Online Streaming Video Properties
Chart 2.60: Actions Taken After Viewing Online Video
Table 2.61: Selected Video Properties Comparison Chart

Selected Video Site Profiles

Google Video
AOL Video
Yahoo! Video
AltaVista Video Search
Blinkx.com
Everyzing.com (formerly Podzinger.com)
Pixsy.com
Truveo (Acquired by AOL in January 2006)
YouTube (Purchased by Google Inc. in November 2006)

Chapter 3: Top Search Properties

Chart 3.1: SEM Agencies View Top Search Properties – 12-Month Outlook
Chart 3.2: SEM Agencies Rate the Top Search Engines – ROI
Chart 3.3: SEM Agencies Rate the Top Search Engines – Customer Service
Chart 3.4: SEM Agencies Rate the Top Search Engines – Targeting Tools
Chart 3.5: SEM Agencies Rate the Top Search Engines – Keyword Suggestion Tools

Top-Tier Search Engine Profiles

Google
Yahoo!
Microsoft LiveSearch & AdCenter
Table 3.6: Selected Search Properties’ Comparison 1 – Setup and Bidding
Table 3.7: Selected Search Properties’ Comparison 2 – Ad Targeting Options
Table 3.8: Top U.S. Search Terms – Google Properties 2006-2007
Table 3.9: Top U.S. Search Terms – Yahoo! Properties
Table 3.10: Top U.S. Search Terms – MSN Properties
Chart 3.11: Total Searches for 2005-2007 – Top 5 Search Properties
Chart 3.12: Share of Searches 2005-2007 – Top 5 Search Properties
Chart 3.13: Unique Searchers 2005-2007 – Top 5 Search Properties
Chart 3.14: Penetration for 2005-2007 – Top 5 Search Properties
Chart 3.15: Searches per Searcher 2005-2007 – Top 5 Search Properties
Table 3.16: “Lifestage” Demographics of Top 5 Search Engines – Composition of Searches
Table 3.17: “Lifestage” Demographics of Top 5 Search Engines – Composition of Unique Searchers
Table 3.18: Household Income Profile of Top 5 Search Engines by Composition of Searches
Table 3.19: Household Income Profile of Top 5 Search Engines by Composition of Unique Searchers
Chart 3.20: Information Workers Prefer Google

Search Engine Shares – International

Chart 3.21: Online Language Share

Focus on: China & India

Chart 3.22: Pace of Asian Internet Usage Outpacing World
Chart 3.23: Baidu Leads, But Google’s Slide Is Over
Table 3.24: Click Fraud a Serious Concern in China
Chart 3.25: Chinese Search Marketers = Small Businesses
Table 3.26: Top 25 Advertisers in China, Ranked by Spending
Table 3.27: Chinese Online Advertising by Industry Sector
Table 3.28: Top Web Properties – India
Table 3.29: Top Activities and Sites in India

International Search Data

Table 3.30: Search Property Comparison – Australia (Home & Work)
Table 3.31: Search Property Comparison – Brazil (Home)
Table 3.32: Search Property Comparison – France (Home & Work)
Table 3.33: Search Property Comparison – Germany (Home & Work)
Table 3.34: Search Property Comparison – Italy (Home & Work)
Table 3.35: Search Property Comparison – Japan (Home)
Table 3.36: Search Property Comparison – Spain (Home)
Table 3.37: Search Property Comparison – Switzerland (Home)
Table 3.38: Search Property Comparison – United Kingdom (Home & Work)

Chapter 4: Search Tactics and Measurement

Chart 4.1: How Search ROI Stacks Up – Marketing Tactics Compared
Chart 4.2: How ROI Stacks Up – Marketers Spending Over $25,000 per Month on Search
Chart 4.3: How ROI Stacks Up – Marketers Spending Under $10,000 per Month on Search
Chart 4.4: SEM Campaign Tests ROI – Agency View
Chart 4.5: Impact of Landing Page Elements
Notes from the Field: How to Increase Conversions as a Print Subscription Publisher by Revamping Search Landing Pages
Chart 4.6: SEM Campaign Tests ROI – Agency View by Clients’ Average Spend
Notes from the Field: How to Measure Search Campaign ROI Using an Innovative SEM Scoring System
Chart 4.7: Targeting Search Users – Tactics Rated by Agencies (Average)
Chart 4.8: Targeting Search Users – Tactics Rated by Agencies With Average Client Spend Above $25,000
Table 4.9: Coping With Rising Keyword Prices – Agency View
Notes from the Field: Improving Search Marketing ROI
Chart 4.10: Keyword Research: Tactics for Keyword Research

Emerging Capabilities in Search

Chart 4.11: Emerging Capabilities – What’s in Store for Search?

Search Engine Optimization

Chart 4.12: SEO Lift After Six Months of Optimization – Agencies vs. In-house
Chart 4.13: Technology Marketers Evaluate Site Optimization
Table 4.14: Key Factors in Search Engine Optimization
Chart 4.15: SEO – Easier Said Than Done
Chart 4.16: Obstacles Encountered by Marketers in Implementing SEO Recommendations

Affiliates & Search

Chart 4.17: Merchant Policies Toward Affiliates’ Paid Search Becoming More Sophisticated

Internal Search

Chart 4.18: What’s the First Thing Consumers Do When They Arrive at a Retail Site?
Chart 4.19: Marketers Grade Their Internal Search
Chart 4.20: Marketers Rank Internal Search Capabilities
Notes from the Field: How an Eretailer Tripled Conversions With Internal Search Changes

Chapter 5: Search Benchmark Data

Keyword Prices

Chart 5.1: CPC for Top 3 Search Engines – Averages 2005-2007
Chart 5.2: CPC for Top 3 – Median Price Summary 2006-2007
Chart 5.3: Cost per Click Breakdown – Google 2006-2007
Chart 5.4: Cost per Click Breakdown – Yahoo! 2006-2007
Chart 5.5: Cost per Click Breakdown – MSN 2006 – 2007
Chart 5.6: Cost per Click: Shopping Comparison Engines 2006-2007
Chart 5.7: Cost per Click: 2nd-Tier Search Providers 2006-2007

Keyword Prices by Marketer Type

Chart 5.8: CPC – Marketers with In-house Paid SEM
Chart 5.9: CPC – Marketers with Outsourced Paid SEM
Chart 5.10: CPC – Marketers Bidding on More Than 1,000 Keywords
Chart 5.11: CPC – B-to-C Direct Ecommerce
Chart 5.12: CPC – B-to-C Lead Generation
Chart 5.13: CPC – B-to-B Lead Generation

Keyword Volumes

Chart 5.14: Breakdown of B-to-C Keyword Buying
Chart 5.15: Breakdown of B-to-B Keyword Buying
Chart 5.16: Breakdown of Keyword Buying – Companies Spending Under $10,000 per Month
Chart 5.17: Breakdown of Keyword Buying – Companies Spending More Than $25,000 per Month
Chart 5.18: Breakdown of Keyword Buying – Companies with Outsourced PPC

Conversion Rates

Chart 5.19: Paid Search Conversion Rates
Chart 5.20: Natural Search Conversion Rates
Chart 5.21: Shopping Comparison Engine Conversion Rates
Chart 5.22: In-House vs. Outsourced Conversions Rates – PPC
Chart 5.23: In-House vs. Outsourced Conversions Rates – SEO

Clickthrough Rates

Chart 5.24: Clickthrough Rate Averages 2005-2006
Chart 5.26: B-to-C Clickthrough Rates – Top Engines and Shopping Comparison
Chart 5.27: B-to-B Clickthrough Rates – Top Engines

Appendix – Demographic Data for 2007 Search Marketing Benchmark Survey

Chart A.01: SEM Agency Respondents – Clients’ Monthly Search Spend

Chart A.02: Marketers Monthly Search Spend

Chart A.03: Respondents by Primary Product Type

Chart A.04: Respondents by Primary Conversion Type

Chart A.05: Respondents by Primary Customer Type

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