March 8, 2006, 12:00 AM

Paid search to top $10 billion by 2009, new report says

Although growth is slowing, spending on paid-search advertising will surpass $10 billion by 2009, up from $5.1 billion last year, eMarketer said in a report released this week.

Kurt Peters

Executive Editor

 

Although its growth rate is slowing, spending on paid-search advertising will surpass $10 billion by 2009, up from $5.1 billion last year, eMarketer Inc. said in a report released this week.

EMarketer projects that spending on paid-search ads will reach $11.3 billion by 2010, which is similar to a forecast released recently by Search Engine Marketing Professionals Organization.

EMarketer also projects that the growth rate of paid-search spending will hit 26.2% this year over 2005, down from year-over-year growth rates of 33.2% in 2005 and 51.4% in 2004. It projects the rate will hit 16.4% next year and hit 11.8% in 2010.

Jupiter Research, by comparison, forecasts more modest growth rates over the next several years. It figured paid-search spending in 2005 at $4.2 billion, and that it will rise 14% this year to $4.8 billion, then gradually decline to a growth rate of 8.7% in 2010, when it figures paid search spending will reach $7.5 billion. Jupiter’s figures on paid-search spending are lower than those of eMarketer and the search marketing organization because Jupiter does not include contextual search ads, or search ads that appear with related site content, which it includes under the category of display advertising.

The maturing paid-search market will present new opportunities for marketers as search engines are forced to improve their products, says eMarketer senior analyst David Hallerman. "The search engines will need to refine and improve their products, which will create greater opportunities for search marketers to unearth more effective niches," he said. "Such maturity will include more vertical search for better targeting, and a sharp rise in local search, as both users and advertisers increasingly realize that the Internet is the best place to make contact with any kind or size of business."

 

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