Yesterday the Latitude Group (nb - they are a search agency in the UK) published “An Analysis of the $11bn Shortfall in Search Revenue in the US Search Marketing Industry.” (pdf download)

It states that in the US, search engines in 2006 could have earned an extra $11 billion, and to a degree blames some of this phenomenon to the fact that in the US, about 75% of marketers manage search in-house vs. by an agency. They go as far as to say that the US advertising industry is more conservative in the UK, and that the in-house campaign manager “simply cannot compete” (with the implied expertise of the search agency.) These are pretty bold statements!

There are some strong supporting points in the paper citing other factors likely influencing the seeming US revenue shortfall vs. the UK market (such as UK engines pay commission to agencies, UK market is more mature and therefore more innovative, etc.)

Oddly, what it seems like is happening in the US, at least for Google, is that they are constantly putting tools in the hands of in-house marketers to empower them. (witness the releases of Analytics, Conversion Tracking, PPA payment model, Website Optimizer, providing extensive AdWords Optimization tips on their blog, and even hands-on campaign optimization offers by their Optimization staff.)

It’s almost like it’s an effort by Google to get some more of the US search revenue share by making the marketer more self-sufficient, and less reliant on an agency, and therefore more money devoted to clicks vs. going to an agency commission.

Posted in: Default | SEM Agencies | Search Industry Trends