Title: Search Engine Metrics... Organic Search vs. Paid Placement
Author: Lawrence Deon
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Search Engine Metrics... Organic Search vs. Paid Placement
by Lawrence Deon

Let me preface this report by citing advertisers in 2004 have
spent 4 Billion dollars on search engine marketing according to
the Search Engine Marketing Professional Organization (SEMPO).

Website marketers cited Search engine positioning was the top
method to drive traffic to their sites (66%), followed by email
marketing (54%). Source: Direct Marketing Association.
Accordingly, the most cost effective way to market your web site
online is to obtain several top 10-search engine rankings in the
major search engines for your keywords.

According to a recent Jupiter Research Survey, searching on the
search engines is one of the main uses of the Internet among 79%
of users. Source: September 2002 Jupiter Research Survey. So that
being the case, whatever your promoting youíll want to make sure
it can be found on the first page of the search engines results

The reason is numerically simple. An Iprospect Survey in 2002
reported that 78% of web users abandon their search if the first
3 pages don't provide an answer to their question, and 28% donít
scroll past the 2nd page of results. Source: Media Post article
reporting results of Spring 2002 IProspect survey.

Combine those facts with the Internets explosive growth rate of
1.8 Million people worldwide going online every week for the
very first time, Source: Official Guide To Internet Promotion
and you can soon appreciate what a top 10 ranking can mean to

Google receives approximately 39.4% of all search engine traffic.
Yahoo receives approximately 30.4%. Theyíre simply the largest
search engines being utilized online today.

Bringing up the rear is MSN at 29.6%, and AOL 15.5% then Ask
Jeeves with 8.5%. Source: Nielsen//NetRatings January 2004

How much traffic is that? Well, Google and its partner sites
were reporting a whopping 250 million searches a day in February

Overture and its partners were reporting over 167 million
searches per day. Inktomi reported 80 million followed by
LookSmart with 45 million per day.

FindWhat reported 33 million while Ask Jeeves reported 20 million,
Alta Vista reported 18 million and finally Fast reported 12
Million searches per day. Source: Searchenginewatch.com 2004.

With all said, you can easily see how your search engine rankings
are directly proportional to the traffic your web site receives,
and your site traffic is directly related to your potential to
profit online.

Oh, and in case your wondering how much money is spent online; a
recent Forrester Research Report indicated that online spending
reached $95,700,000,000 million in 2003! That's a cool 95.7
billion dollars. Projected online spending is estimated to grow
to $229 billion in 2008! A whopping 139% increase in online
spending! Source: Forrester Research

Now with these facts in mind Iím confident you can clearly see
what a top 10-search engine ranking can mean for your bottom line.
Although it does leave a question unanswered in my mind, what has
a higher ROI... organic search engine optimization or paid search?

According to SEMPOís key analysis, the U.S. & Canadian SEM
Industry Size Estimate by tactic in 2004, organic SEO accounted
for 12% of the market share or $492,057,200 while Paid Placement
accounted for $3,341,878,176 or 81.8%.

Interestingly, 9 out of 10 respondents are actively engaged in
organic SEM marketing programs accounting for 89% of the
respondent advertisers. This trend can be contributed to the
average cost of popular keywords continuing to escalate.

If the escalation continues to rise it could make paid search
engine advertising exponentially cost prohibitive for all but
the largest advertisers... the 900lb gorillas!

Simply put, ROI is outpacing inflation: SEMPOís key analysis
indicates advertisers could afford to pay on average 33% more
for their keywords and remain profitable, while they say prices
have gone up 26% on average in the last 12 months. Thatís
leaves a 7% advertising margin to maintain current profits for

SEMPOís data also noted that advertisers will get smarter about
managing their paid placement programs before they cut back on

This is also consistent with a report released by Nielsen/NetRatings
indicating that the growing demand for search engine advertising
is outstripping the supply of currently available advertising space.

These findings seem to indicate the inventory of keywords is
approaching a critical demand problem however; most advertisers
felt they still have some degree of price flexibility in their
paid placement programs before they will reach the threshold of
diminishing returns.

Is there any wonder why organic search engine positioning has
gained popularity for online marketers in 2004? Could it be
higher (ROI) return on investments?

SEMPO also cites that 43% of advertiser respondents have shifted
their budgets away from other marketing programs for Organic SEO.

So what does it all mean? Let the numbers speak for themselves.

Organic SEO is undeniably gaining favor over the lower ROI paid
advertising. This is evidenced by virtue of the fact that paid
advertising is becoming less profitable.

Although paid advertising will continue to hold a large portion
of the market share, as paid advertising returns diminish and
keyword costs soar my early 2005 forecast is for the
materialization of a progressive organic SEO market trend to
facilitate the need for advertising space.

Copyright 2005 Lawrence Deon

About the author: Lawrence Deon is an SEO/SEM Consultant and
Author of the popular search engine optimization and marketing
model Ranking Your Way To The Bank.



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