February 11, 2004, 12:00 AM

Search engine marketing to grow at slower pace, study says

Growth in search engine marketing will cool off this year following last year’s surge, but will continue to offer opportunities to expand particularly with local market advertisers, market research publisher eMarketer reports.

Growth in search engine marketing will cool off this year following last year’s surge, but will continue to offer opportunities to expand particularly with local market advertisers, market research publisher eMarketer Inc. reports in its latest Search Engine Marketing report. It advises, however, that web site operators who buy search-based marketing first check site performance before attracting a large number of new visitors.

EMarketer notes that U.S. spending on paid search advertising rose to about $2.06 billion last year, up 123% from $923 million in 2002, but will rise more slowly this year, about 23%, to over $2.5 billion. It figures search advertising will rise to about $3 billion next year, but then face sharper growth later in the decade.

"The market potential for local search is enormous," says eMarketer senior analyst David Hallerman, author of the Search Engine Marketing report. "As search engines find more ways to work with traditional yellow page providers, merging the success of online search with the personalized sales forces required to gain more local advertisers, the market will expand exponentially during the latter part of the decade."

Hallerman warns that the potential influx of new customers from search advertising will require web site operators to be extra careful about making sure their sites offer positive shopping experiences. “Behind all search marketing is an effective web site,” he says. “You don`t want potential customers clicking only to become confused or frustrated. Get your house in order before inviting in a slew of new guests."

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