Paid for search listings in the US look set to grow by 47% this year, with sponsored search adspend in the States forecast to increase by $1.6 billion, up to around $5.1 billion this year, from $3.5 billion in 2004, according to analyst Merrill Lynch’s latest report.
Overall, Merrill Lynch forecasts that online advertising in the US will reach $12.4 billion this year, increasing by $12.6 billion to hit a massive $25 billion by 2009.
These strong predictions are estimated to result in online search accounting for 45% of all online adspend in 2005.
The analysts attribute the growth in online advertising to the increase in broadband adoption, resulting in more queries to search engines.
The latest forecasts from JupiterResearch predict online households in the US to reach 88 million by the end of 2010, up from 75 million at the end of 2004, with an expected 78% penetration rate. (see US Online Households Forecast To Hit 88 Million By End Of 2010).
Commenting on the report, Lauren Rich-Fine, first vice president at Merrill Lynch and author of the report said: “Search volume growth really has been the biggest driver of growth in paid search advertising in late 2004 and into early 2005.”
She added: “We believe this trend will continue as broadband subscription prices continue to drop, more users move to broadband connections, and ultimately conduct more queries.”
Merrill Lynch also forecasts there to be a 20% increase in query volume in 2005, with data from comScore Networks showing that the volume of queries per user grew between 16% and 18% in the first quarter of this year, compared to between zero and 4% in the same period in 2004.
Online advertising is predicted to perform strongly in 2005, with industry experts forecasting the medium to continue growing.
Financial services company, Goldman Sachs, has predicted 2005 to be a bullish year for online advertising, forecasting the market to increase by 28% year on year, to reach $12.3 billion (see Goldman Sachs Predicts Online Adspend To Rise By 28% In 2005).
Forecasts released earlier this month by Forrester Research are more optimistic than Goldman Sachs, predicting online adspend to reach $14.7 billion this year, a 23% increase on its 2004 estimates (see US Online Ad and Marketing Spend To Reach $14.7 Billion in 2005).
Market analyst eMarketer’s predictions are closer to Goldman Sachs’, projecting online advertising to hit $12.9 billion in 2005, a 34% rise on eMarketer’s 2004 forecast (see Online Adspend To Hit $13 Billion In 2005).
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