Advertisers in the U.S. and Canada spent $5.75 billion on search engine marketing (SEM) in 2005 - 44 percent more than in 2004 - according to "The State of Search Engine Marketing 2005" report, released today (Monday) by the Search Engine Marketing Professional Organization (SEMPO), which predicts that SEM spending in North America will reach $11 billion in 2010. The survey found that 83 percent of SEM spending, or $4.7 billion, was spent in 2005 on paid placement.

Though four out of five advertisers report they engage in organic search engine optimization (SEO), it accounted for only some 11 percent of overall spending.

Paid inclusion accounted for 4 percent; SEM technologies, including leasing, agency solutions and in-house development, accounted for less than 2 percent of overall spending.

Search Engine Watch adds that according to the SEMPO report Google and Yahoo dominate the paid search market, with 95 percent of search marketers running campaigns on Google and nearly 60 percent doing so on Yahoo. In contextual advertising , 46 percent of search marketers are running campaigns with Google AdSense and Yahoo Search Content Match. Some 38 percent also report using Yahoo's paid inclusion program. MSN, despite its recent entry into the marketplace, had nearly one-third of advertisers running a campaign on it.

SEMPO found that 62 percent of search marketers said branding was the primary objective of search campaigns, but nearly as many - 60 percent - said selling was a key objective. Smaller companies are more focused on selling products; those with more than 500 employees are more interested in gaining leads and driving traffic to their websites.

Though less than 24 percent track or measure branding impact, 80 percent track traffic volume, 74 percent measure conversion rates, and 69 measure clickthrough.

Advertisers surveyed were more interested in managing SEM campaigns in-house rather than outsourcing to agencies, writes DM News. Two-thirds said they intend to manage all of their SEM initiatives in-house, likely a short-term measure "as the SEM agency marketplace undergoes consolidation and contraction," according to the report.

SEMPO's survey was conducted by Radar Research LLC and Intellisurvey.