SEO seems to be losing out to paid search budgets according to a new report released by E-consultancy.

Search Engine Marketing Buyer's Guide forecasts search marketing spending will increase by 24% this year.

Even in the face of recession companies will be maintaining their search marketing budgets. The report estimates that of paid search will be seven times higher than that spent on search engine optimization (SEO). This makes sense to me because paid search has the most trackable returns and is easily measureable. Budgets can be quickly reallocated to campaigns that are performing as opposed to SEO or other forms of advertising where the returns are calcualted many months after the initial marketing investment.

Paid search has the benefit of quickly being able to reallocate and redirect funds. Because of this it is among the most efficient forms of advertising. This is good news for companies that have medium to small budgets. Companies struggle to make sound descisions about where to allocate advertising dollars to better promote themsleves. They ask questions like - do I keep advertising in the yellow pages, which is not performing like it used to or do I find something else. Many of these companies are choosing paid search - in fact according to the Kelsey Group report local business advertising is going to grow 30% this year alone. Paid search is virtually the only way to gain an immediate online presence.

That said, if you can afford it, don't abandon your SEO strategies and go for paid search only - you would be losing out on a potentially lucrative marketing channel and giving your competition an edge in the long term. The con about paid search is that over time the cost fluctuates with competition. If you can't afford both and you need to reallocate those funds - don't worry your SEO effort will not be a loss. You won't have to start from zero when you resume your SEO efforts. In fact you may learn something that will compliment those efforts from your paid campaign.

If you need to generate business today then your only option is paid search. Use paid search to not only generate business but to compliment your online SEO effort long term. Try and understand the data available to paid search. What terms convert searches into leads? What does that lead cost? What is the rate of converting leads to customers? What is the return on the investment.

Mark Sprenger - President LocoBee.com
Local Busines and Search Marketing Expert