Will SEM ad spending in HK surpass other mediums in 2025?

Search engine marketing (SEM) has been widely recognised as a potent tool for driving conversions. This approach empowers advertisers to target individuals actively seeking particular products or services, thereby achieving exceptional conversion rates. According to GWI’s report, at a worldwide level, search engines remain the primary source of brand awareness for the world’s connected consumers, with 32.8% of GWI’s survey base saying that they discover new brands and products via online search. 

While in Hong Kong, search engine marketing (SEM) ad spending reached HK$5.3 billion in 2024, accounting for 15% of media share, according to AdmanGo.  Among SEM ad spending, text ads represented 87%, while shopping ads made up the remaining 13%. SEM was the fourth-ranked medium in terms of media market share, following desktop/ mobile, social media, and TV, making it a highly valued medium among advertisers.   

Don't miss: Survey: HK search engine marketing ad spending reaches HK$5.3bn

The increase in demand for search engine marketing in Hong Kong can be attributed to the need for effective branding in a competitive market, said Gary Cheung, managing director, Hong Kong & Taiwan, NP Digital in a conversation with MARKETING-INTERACTIVE.  

“A strong online presence enhances visibility and identity, making SEM essential for attracting and retaining customers. Both large corporations and small businesses are increasingly investing in SEM, with small businesses leveraging targeted ads to reach local customers effectively. Enhanced targeting capabilities allow businesses to tailor their ads based on demographics and user behaviour, improving conversion rates,” he added. 

He added that search engine marketing offers cost-effective solutions compared to traditional advertising, particularly through pay-per-click models that appeal to companies with limited budgets.  

Furthermore, the rise of digital-first businesses has fuelled the increase of search advertisers, said Ivan Leung, co-founder and general manager of Aloha. “These businesses recognise that search marketing is a critical touchpoint in the purchase journey, helping to drive visibility, traffic, and conversions.” 

Search engines are a go-to resource for information, with users relying on them for everything from product research to immediate answers, said Leung.

This dependency makes search ads a powerful tool for capturing intent-driven traffic at critical decision-making moments. This enhances search demand, attracts more advertisers, and also increases ad competition, leading to higher costs and spending.

Will SEM ad spending outgrow other mediums?

Despite a significant demand in SEM ad spending in Hong Kong, consumers nowadays are fed with plenty of content across a variety of channels, such as mobile apps, social media, streaming services, and search engines. According to the Global Digital Report 2024 conducted by Meltwater and We Are Social, Hong Kong has an 86.2% social media penetration rate, showing people's regular use of social networks. 

As such, SEM ad spending may still lag behind other mediums such as mobile, social media, and TV in the coming year, said Keith Fong, head of performance, dentsu Hong Kong, adding that advertisers need to be present across these mediums to capture attention effectively.

“Mobile, social media, and TV play significant roles in shaping consumer behaviour and preferences well before they initiate a search. These channels are essential for creating brand awareness and capturing the attention of a broader audience. While SEM is effective at targeting users with relatively high purchase intent, the audience size in the upper funnel is much larger," he added.

Instead of one medium dominating, it is more likely that the overall advertising pie will continue to grow, driven by the anticipated expansion of digital advertising, said Aloha's Leung. "Each medium will maintain its importance within the mix, contributing to an integrated strategy that maximises reach and effectiveness. He added: 

SEM will remain a crucial piece of this puzzle, but not at the expense of other established or emerging channels.

On the other hand, Yoyo Ng, managing director, Greater China, First Page and Superist, said it is likely to surpass other mediums as SEM targets users actively searching for products/services, making it the most intent-driven medium. 

This leads to higher conversion rates compared to broader platforms such as social media or TV, explained Ng, taking reference from Google Ads consistently delivering a 200% ROI on average, according to Google Economic Impact's methodology. Furthermore, the great shift to digital and eCommerce, as well as the decline in TV and traditional media ad spending also contribute to the possibility of SEM ad spending surpassing other mediums, she said. 

How can marketers maximise their ROI in SEM ad spending? 

When it comes to marketing dollars, Aloha’s Leung said maximising return on investment (ROI) in SEM ad spending begins with recognising that there is no one-size-fits-all approach. “Each company's strategy should be tailored to its unique business nature, budget, and objectives. A deep understanding of how your target audience uses search is crucial to crafting effective campaigns for your business.” 

For instance, companies selling high-monetary value products might benefit more from optimising for sign-ups rather than direct sales, as consumers are less likely to make high-stakes decisions based on a single text ad, he added. “Setting the right objectives and providing accurate data signals is essential for success, allowing the platform’s systems to work effectively in the advertiser’s favour.” 

Advertisers should also conduct thorough keyword research, use compelling ad copy and extensions, and leverage data and analytics for continuous optimisation, said dentsu’s Fong. “Precise geographic and demographic targeting, alongside a gradual budget structure, optimising landing pages for relevance and speed, and utilising automated bidding strategies can further enhance results.” 

Additionally, employing audience segmentation such as remarketing lists for search ads (RLSA) for personalised delivery, and staying updated on industry trends and competitor strategies, will ensure a more effective and efficient SEM campaign, he added. 

Advertisers can also maximise ROI in SEM ad spending by leveraging AI's capabilities across various aspects of their campaigns, said NP Digital’s Cheung. “By utilising AI for tasks such as image and video creation, writing compelling headlines and descriptions, and automating keyword additions, advertisers can enhance the efficiency and effectiveness of their ads.” 

AI can also improve audience targeting, ensuring that ads reach the right consumers, while providing support to optimise performance, he added. “Embracing these technologies will allow advertisers to streamline their processes, create more engaging content, and ultimately drive better results from their SEM investments.” 

First Page's Ng suggested marketers can continuously conduct A/B ad copy testing to improve clickthrough rates and conversion rates, and ensuring landing pages are aligned with ad messaging and optimised for better ROI. "Implement retargeting campaigns to re-engage users who didn’t convert initially is also key. Advertisers should also focus on first-party data and contextual targeting to adapt to privacy regulations, as well as combining SEM with social media and email marketing for a cohesive customer journey," she added.

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