February 11, 2004

Paid Search Looks Local for Next $1 Billion

My spin: There is definitely room for "paid search" listings by companies and I think for sure, companies looking for fast solutions will find it in their local service providers and/or retailers.

According to eMarketer's new Search Engine Marketing report, US paid search advertising spending soared 123% over the previous year, rising from $923 million in 2002 to over $2 billion last year. Estimated to grow by $0.5 billion this year and again in 2005, paid search will remain a substantial part of online advertising revenues.

In order for paid search growth to continue, however, search sites and portals will have to create products designed and priced to appeal to local advertisers - a vast business segment they have largely bypassed. Further spending growth will come from contextual search, which will deliver additional revenue streams to Web publishers and e-commerce sites.

"The market potential for local search is enormous," says eMarketer Senior Analyst David Hallerman, author of the Search Engine Marketing report. "As search engines find more ways to work with traditional yellow page providers, merging the success of online search with the personalized sales forces required to gain more local advertisers, the market will expand exponentially during the latter part of the decade."

In the meantime, before such businesses decide whether to buy into paid search, Hallerman advises, "Behind all search marketing is an effective Web site. You don't want potential customers clicking only to become confused or frustrated. Get your house in order before inviting in a slew of new guests."

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