January 5, 2006, 12:00 AM

Search marketing: hot and getting hotter, says Cowen research report

Paid search advertising will grow at a compounded rate of 23% a year through 2010, when it reaches $17.3 billion, up from an estimated $6 billion in 2005 and $8.7 billion this year, says the latest “Internet & New Media” report from S.G. Cowen & Co.

Search marketing may be the hot form of marketing today, but it’s only just getting cranked up, says the latest “Internet & New Media” report from investment researchers S.G. Cowen & Co. Paid search advertising will grow at a compounded rate of 23% a year through 2010, when it reaches $17.3 billion, up from an estimated $6 billion in 2005 and $8.7 billion this year, Cowen says.

The total online advertising market will grow at a compounded rate of 14% during the same time, reaching $12.4 billion in 2010. By that time, paid search will account for 58% of all online advertising spending, compared to 48% in 2005.

In 2010, online advertising will account for 8% of all U.S. advertising, up from about 5% in 2005, Cowen reports.

Between the Monday after Thanksgiving and Dec. 23, 2005, prices for retail keywords kicked up 6.2%, then, not surprisingly, fell steeply in the last week of the year to their pre-Thanksgiving levels, Cowen reports. During the same period, the cost of all keywords was up 4%, with a drop after Dec. 23. Cowen has been tracking the costs of 3,300 keywords in several vertical markets since November 2004.

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