In fact, advertisers in the U.S. and Canada alone spent $5.75 billion on Search Engine Marketing (SEM) in 2005, a 44 percent increase over 2004 spending, according to a report by the Search Engine Marketing Professional Organization (SEMPO). http://www.sempo.org/news/releases/Search_Engine_Marketers

The report, “The State of Search Engine Marketing 2005,” also projects “that SEM spending in North America will reach $11 billion in 2010. The annual totals include payments to search engines and search-related media companies, search engine marketing agencies and in-house expenditures in support of such programs. The programs include paid placement, paid inclusion, organic search engine optimization and search engine marketing technology platforms.”

"The survey found the bulk of the SEM spending was spent in 2005 on paid placement, accounting for 83 percent or $4.7 billion. While four out of five advertisers report they engage in organic search engine optimization (SEO), organic SEO accounted for approximately 11 percent of overall spending; paid inclusion accounted for just 4 percent of overall spending; and SEM technologies, including leasing, agency solutions and in-house development, accounted for less than 2 percent of overall spending."

The report is available for members only of the Search Engine Marketing Professional Organization (SEMPO) but you can read the news release for free.