SOURCE: eMarketer

March 07, 2006 07:05 ET

Paid Search Ad Spend Will Hit $10 Billion by 2009

New eMarketer Search Marketing Report Finds Search Industry Maturing

NEW YORK, NY -- (MARKET WIRE) -- March 7, 2006 -- A new report from Internet researcher eMarketer forecasts that paid search advertising spending, slowing from its meteoric rise the last few years, will still hit $10 billion by 2009.

eMarketer forecasts that US paid search ad spending in the US in 2006 will grow by 26.2%, a full seven percentage points less than last year's 33.2% gain. After triple-figure growth rates earlier in the decade, more modest growth rates will prevail through the rest of the decade.

"Clearly our growth rates are slowing," said Google's chief financial officer, George Reyes, on February 28, 2006, noting that the company's revenue growth is decelerating because of the "law of large numbers." In other words, hyper-growth can't be sustained forever. And as Google goes, so goes the search marketing industry.

eMarketer's David Hallerman, Senior Analyst and author of the new report Search Marketing I: Spending and Metrics, finds the slowing growth rate expected. "As this market matures, the search engines will need to refine and improve their products, which will create greater opportunities for search marketers to unearth more effective niches," says Mr. Hallerman. "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."

Key data points from the report include:

--  Paid search ad spending in the US will top the $10 billion mark in
    only three years, in 2009.
--  Paid search ad spending growth will slow to 26.2% this year and 16.4%
    next year...but it will still continue at a rate that most other media
    would be delighted to have.
--  Paid search will continue to be the dominant form of online
    advertising, at around a 40% share of the overall market.
--  By 2010, local search ad spending will make up nearly 20% of all paid
    search spending.
--  In fact, the growth of local search will outstrip national search in
    every year from 2005 through 2010.
Search Marketing I: Spending and Metrics is part one of eMarketer's two-part study on search marketing. The second installment of this report will be available in April '06.

eMarketer's new Search Marketing I report provides answers to these questions:

--  Will search marketing continue its strong spending growth?
--  How does Google's dominance affect the search market?
--  How will local search contribute to spending increases?
--  What metrics best gauge a search campaign's effectiveness?
--  Can search make branding better?
--  And many more...
Click here for more information on eMarketer's new Search Marketing I: Spending & Metrics report.

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