The huge success of the paid search advertising market will be a key component in the modest recovery of US internet advertising this year, according to Jupiter Research.
The industry’s first independent paid search revenue projections are released by Jupiter today as part of its online advertising forecast, which shows a market developing new formats and returning to growth. Jupiter says that as paid search revenues jump by almost 50% to $1.6 billion, the overall online ad market will grow by 20% to $6.3 billion in 2003.
Paid search allows advertisers or businesses to bid for premium positions in a search engine’s search results. For example, an audio equipment retailer might pay to appear at the top of the page when a user runs a search for ‘headphones’.
The emergence and growth of paid search has been swift. Jupiter’s figures show that revenues are already commanding more than a quarter of total online advertising expenditure in the US.
The attractiveness of the market was demonstrated earlier this month when Yahoo! agreed to buy search targeted marketing pioneer, Overture, for more than $1 billion (see Yahoo! Acquires Overture In £1bn Deal).
Jupiter Research’s report predicts that online display advertising sales will retract by 6% this year, to just over $3 billion, but forecasts that a return to growth will come in 2004. Better inventory control by publishers and the impact of broadband uptake will push online display revenue up by 15% next year and by over 20% in 2005 and 2006.
Jupiter forecasts that online advertising, including paid search, display ads and classifieds, will grow to $14.8 billion in 2008, when online advertising will represent 6% of total US adspend.
Separate forecasts from Merrill Lynch predict that US internet advertising spend will rise by 5% this year and 10% in 2004.
To see all the latest US advertising forecasts by medium, click here.
