Paid Search Expected to Outpace Display By 2010

  |  September 20, 2005   |  Comments

JupiterResearch expects emerging players in the search engine space to push paid search ahead of display.

Paid search revenues are set to outpace display advertising by 2010, according to a JupiterResearch report forecasting the next five years in the U.S. paid search market.

The category accounted for 34 percent of total online ad spending in 2004, or $4.2 billion in spending. In 2009, paid search will draw even with display advertising, with both bringing in around $6.9 billion. By 2010, paid search, including paid listings and paid inclusion, is expected to equal 40 percent of the online ad spend, or $7.5 billion.

"Marketers are becoming more aware of the increasing benefits of paid search in their campaign," Sapna Satagopan, lead analyst on the report at JupiterResearch, told ClickZ News. While immediate sales is the top goal for a majority of the marketers who use paid search, the benefits of paid search in branding and purchase decision or research processes will become more evident as well."

The pace of growth is expected to increase due to new players in the search engine space, with immediate boosts from Ask Jeeves’ new paid search program and the launch of MSN AdCenter. Satagopan said both Ask Jeeves and MSN AdCenter paid listings programs will take about 12 months from to gain traction and start to significantly impact the paid search.

"Currently, marketers are attempting to handle the expanding campaign size in terms of search engines used," said Satagopan. "As marketers start to better manage and monitor their campaigns across search engines, they will see the value of increasing the spending to search engines such as MSN and Ask Jeeves."

Cost-per-click is expected to increase from $.39 back in 2004 to $.58 by 2010. Cost is a major concern to marketers, the study found.

"Marketers should move out of the ’bid for top position’ method and opt instead, to measure and base their bidding on the revenue the keyword fetches," said Satagopan. "As a campaign becomes bigger, marketers adopting tools to monitor and measure search campaigns can comparatively better evaluate and plan their bids. Sophisticated marketers, who do so, see a better ROI in their campaigns."

Forty-two percent of sophisticated marketers plan to increase their search budget next year, said Satagopan, because they are achieving a positive ROI.

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