Search growth rates are slowing, with paid search in the US expected to increase by 26.2% in 2006, somewhat less than last years 33.2%, according to eMarketer.
This trend looks set to continue over the coming years, with the analyst asserting that starting next year and through to the end of the decade, more modest growth rates will prevail.
David Hallerman, senior analyst and author of the new eMarketer, Search Marketing I: Spending and Metrics report, said: “You must keep in mind however, that in a mature market even low two figure adspending growth represents significant opportunities.”
As consumers get used to search, their searches get increasingly complex, moving beyond just one or two terms in a keyword.
This has resulted in marketers increasing the average number of keywords they use in paid search campaigns. According to MarketingSherpa, that number nearly doubled to 17,314 in September 2005 from 9,100 the same time a year ago.
Hallerman said: “As this market matures, the search engine will need to refine and improve their products, which will create greater opportunities for search marketers to unearth more effective niches.”
He continued: “Such maturity will include more vertical search, for better targeting, and a sharp rise in local search, as both users and advertisers increasingly realise that the internet is the best place to make contact with any kind or size eof business.
Despite this expected downturn, search engine marketing is expected to double over the next three years. Speaking at the recent Search Engine Strategies Conference & Expo, Geoff Ramsey, chief executive officer of eMarketer, predicted that $10 billion would be spent on the advertising channel in 2009, up from $5 billion in 2005 (see Search Engine Marketing To Double By 2009).
According to Outsell, search engine advertising expenditure will rise by 26% in 2006, with online advertising expected to be used by 90% of marketers by 2008, up from the current 80% (see Search Engine Adspend To Rise By 26% In 2006).
Elsewhere, paid search is also expected to enjoy a healthy 2006, with a recent report from Piper Jaffray predicting the medium to generate more than $14 billion globally over the coming year, enjoying an increase of 41% from the estimated $10 billion that it made in 2005 (see Paid Search To Reach $14 Billion Worldwide In 2006).
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