Study: Paid search to boost ad dollars

An almost 50 percent increase in paid search listings will drive a modest recovery in online advertising sales during 2003, according to findings released by Jupiter Research on Wednesday.

The research firm estimates that out of the total $6.3 billion online advertising pie, paid search will account for $1.6 billion. Online display ad sales will be just over the $3 billion mark.

Paid links, or sponsored searches, have fueled revenue growth for search engines such as Overture Services and Google. In this model, marketers pay for placement next to or within search results related to specific inputted keywords.

One of the strengths in this formula is that advertisers pay the search sites only when Web surfers click on the links.

Paid search listings have helped pull Yahoo and Microsoft's MSN Web portal from the dot-com advertising mire, but America Online is still seeking a savior.

"Paid search?s impact reaches way beyond its dollar volume," Jupiter analyst Gary Stein said in a statement. "The players, the tactics and the technologies of search are the focal point of critical digital-marketing trends like dynamic pricing and contextual advertising."

Overall, dot-com advertising is projected to record 10 percent growth in 2003. By 2008, online advertising--paid search, display ads and classifieds--will grow to $14.8 billion. This amounts to 6 percent of total U.S. ad spending.

Jupiter predicts that online display ad sales will pick up at the beginning of 2004.

"Better inventory control by publishers and a broadband kicker will push online display advertising sales up over 15 percent next year, and over 20 percent in 2005 and 2006," Jupiter analyst David Card said in a statement.