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"These spending figures show that 2006 was a watershed year for the SEM industry. We have moved from the first wave of adoption of search-based marketing to the myriad of small and medium sized businesses, many of them startups, using SEM as a fundamental part of their business. In fact, many of these SMB companies have been founded on an e-business model and that is a huge implication for our general economy, going forward," says Kevin Lee, member of the Board of Directors of SEMPO and chair of its Research Committee.

Some of the key trends identified in the survey are:

• Organic SEO is still the most popular form of search engine marketing, as almost 75% of the respondents using SEO. However, in terms of a proportion of spend, SEO accounted for 12% of money spent by advertisers ($1.1 billion).


• Paid placement (paid search advertising, more commonly known as pay per click advertising) was used by about 71% of the respondents. However, this form of advertising accounted for 86% of all spend ($8 billion).


• Boosting direct sales is the main objective for search engine marketing, followed by creating brand awareness. This is probably an indication that SEM can contribute directly to revenues/ profits.


• There has been a sharp increase in the number of advertisers who have adopted MSN's PPC platform, though Google Adwords & Yahoo Search Marketing continue to garner the major share of spend on paid placement.