I was struck by this recent SEMPO report which Greg Sterling picked up on the other day. Bottom line is that as the economy suffers and most media is in retreat Search is still projected to post 9% growth. OK it’s not the 20+% growth we have been used to seeing but it does point to Search being perhaps the only bright spot in a bleak landscape.  The fact that search is bucking this trend speaks to the effectiveness of search as a way to reach advertisers, national or local.

You can read the entire report here.

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Mar 10, 2009 at 9:06am ET by Greg Sterling

SEMPO’s new report, due to be released this week, cuts its forecast for search advertising. The results are based on a survey of almost 900 agencies and search marketers. According to the Wall Street Journal, the report scales back previous growth projections considerably:

[SEMPO] says North American search marketing spending will increase only 9% to $14.7 billion in 2009 from $13.5 billion a year ago. Its previous estimates, made in early 2008, called for the industry to grow at more than twice that rate this year, from $15.7 billion in 2008 to $18.8 billion in 2009. The new forecasts call for the industry to reach $19.8 billion in 2011, down from a previous estimate of $25.2 billion for that year.

But even as the economy hits search spending fairly hard, other media are faring worse. Search, widely regarded as the most efficient form of online advertising, is still benefiting from advertiser and agency budget shifts to online:

Search is continuing to steal from traditional ad budgets, according to the survey. More than a quarter of advertisers reported that they were shifting budgets into search marketing from print magazines. Nineteen percent said they were shifting their budgets into search from print newspaper advertising.

The paradox of these shifts is that they express a simplistic view of consumer behavior, which has become increasingly complex and relies on many sources of information and ad exposures, both online and offline. However, many marketers are starting to see with greater clarity the convoluted consumer path to conversions. Search remains perhaps the critical component of online advertising; however a search-only strategy is somewhat myopic.

Here’s an excerpt from findings from Atlas’s (Microsoft’s) recent “engagement mapping” report entitled The Long Road to Conversion: The Digital Purchase Funnel:

The large number of ad exposures consumed prior to purchase may come as a surprise to marketers who are used to discussions of frequency that revolve around site  or campaign metrics. Measuring only the last ad in a  conversion history conceals the true length of the relationship an advertiser has with each consumer. When we focus our view on individual converters’ histories and apply the funnel concept to their ad consumption, we discover that their histories are much longer and richer than typically assumed. These results confirm other research showing that advertising reaches consumers from multiple advertising campaigns and across channels . . .

Yahoo’s increasingly integrated search and display platforms are consistent with this more sophisticated consumer behavior model. And the SEMPO report apparently does find some interest in search retargeting accordingly.

We’ll explore the findings of the SEMPO report in more detail after we have a chance to review it