Search Latitude - How US search marketing industry missed out on nearly $11 billion in 2006

May 4th, 2007

I am constantly impressed by the state of the Search Engine Marketing industry in the UK, in particular the amount of research and ‘noise’ provided by the industry itself. In particular I was impressed with a recent report by Dylan Thwaites (and probably Jon Myers had a lot to do with it - with reference to the whitepaper itself referencing the author Jon Myers). That aside, a very insightful and interesting read,

The whitepaper itself focussed on recent research by the IAB/PWC which stated that 2.5% of all advertising spend in the US is spent on Search, compared against 11.4% in the UK. Dylan went onto state that it was his opinion that the UK online marketing industry is ‘the most advanced in the world’.

“The US market has roughly four times the volume of searches as the UK market and in bid economics should command higher prices for highly competitive phrases. It does not and this indicates a less competitive and less developed market state”.

Not mincing his word you may agree !!!!

The report concluded:

1. The search engines pay commission in the UK and this has had a firestarter effect on search penetration

2. The US market has a much higher proportion of in house search marketers, who to be less innovative and do not operate search as effectively as search agencies, slowing the flow of funds from other media

3. Many US search agencies reacted slowly to the paid search opportunity due to organic inertia

4. The UK market is more mature and more competitive than the US market and hence more intensely innovative

5. Cost per click prices are marginally higher in the UK, but there is no evidence to show that the engines are abusing their market dominance

Whilst I don’t necessarily agree with all the point raised in the report, points 1-3 within the above conclusions would seem to be on the ball from recent research we have conducted, however point 4 is slightly more contentious. In my opinion there are only a handful of agencies in the UK that can handle the large scale projects for the larger organisations, BigMouthMedia, Latitude, a couple of the WPP organisations to name a few. Whilst I don’t argue with his analysis of the recent MSN trials in France vs UK, whether this is comparable to the US market is debatable IMO
However on the whole, the report is well worth a read, and can be accessed by clicking here

Entry Filed under: SEO Industry, Search Engines, News and Views, SEO