Paid Search Is 'Hot'

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July 30, 2003 (11:46 AM EDT)

Paid search, a form of online advertising, will increase almost 50 percent this year to $1.6 billion, powering a modest recovery in web advertising, a market research firm predicted Wednesday.

Online display ad sales, however, would shrink 6 percent over 2002 to just more than $3 billion, Jupiter Research, a division of Jupitermedia Corp., said. Online advertising, overall, would grow 10 percent this year to $6.3 billion.

"At the risk of stating the obvious, search is hot," Jupiter Research analyst Gary Stein said in a statement.

With paid search, companies pay to have their links listed first when a consumer does a search on Google, Yahoo! or other search engines. The sponsored links are often marked to distinguish them from other site listings.

While 2003 is the year of paid search, Jupiter expects online display ad sales to turn around next year, growing by 15 percent. In 2005 and 2006, the growth rate is projected to be 20 percent.

Online advertising overall, including paid search, display ads and classifieds, will grow to $14.8 billion in 2008, when online advertising will be 6% of the size of total U.S. ad spending, Jupiter said.