How much is search engine marketing worth to you?

Nielsen/NetRatings updated its report on the search engines’ market share in the U.S. [PDF]:

  • Google – 48.2% (in January 2006) vs. 47.1% (in January 2005)
  • Yahoo! – 22.2% (in January 2006) vs. 21.2% (in January 2005)
  • MSN Search – 12.8% (in January 2006) vs. 12.8% (in January 2005)

comScore Networks, on the other hand, measured lower but growing market share for Google in January 2006:

  • Google – 41.4% (in January 2006) vs. 35.1% (in January 2005)
  • Yahoo! – 28.7% (in January 2006) vs. 31.8% (in January 2005)
  • MSN Search – 13.7% (in January 2006) vs. 16.0% (in January 2005)
  • AOL – 7.9% (in January 2006) vs. 9.6% (in January 2005)
  • – 5.6% (in January 2006) vs. 5.1% (in January 2005)

These percentages are based on an estimate that 85% of the total U.S. internet user base, or 146 million people, visited a search engine at least once in January 2006.

While the shares of the main search engines haven’t changed much since last year, the total search traffic in January 2006 has grown by 39% (according to Nielsen/Netratings) or by 11% (according to comScore) since a year ago. Whether you use the Nielsen/Netratings’ numbers (5.7 billion searches) or the comScore’s ones (5.48 billion searches in a single month), an average of 3 searches per user on a typical day (based on the 60 million daily search engine users in the U.S., estimate by the Pew Internet & American Life Project) begs the question: do search engine marketers overpay for their traffic, and if so, what is there to do?

The growing importance of search engines as a marketing channel would explain the growth of search engine marketing (SEM) spending only partially. When you compare the SEM annual spending growth, estimated at 277% by MarketingSherpa at a recent web seminar, to the 39% growth of search engine traffic, it becomes obvious that as many as the search engine users are they are not enough — too many of the search engine marketers are competing, and overpaying, for too few eyeballs.

While the fear of the competition might be a big factor for the keyword bidding craze, my guess is that the biggest reason why marketers so willingly part with their dollars is because they do not measure the return on their marketing investments. This is where the importance of web analytics and organic search engine optimization come. One enables the other. Unless you grow (organically), you cannot sustain your business. Unless you measure, you cannot manage. Unless you manage, you spend your online marketing budget at your own risk.

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