Paid search boom

At the outset, here's to a Great year ahead!

We are just into the second week of the year and the numbers and forecasts are beginning to emerge, for example, the paid search industry figures and the latest holiday shopping numbers. For this piece though, I will stick to the former.

A ClickZ article quotes from a Piper Jaffray report that the paid search industry is expected to hit $14 billion globally in 2006, up 41%. Surprise, surprise! Google will lead the way.... and expected to grow its revenues by a whopping 58%. What's more, the overall paid search industry, according to the Piper Jaffray analyst, is expected to grow at a CAGR of 37% up to 2010. And the best piece of news for Google shareholders is that the Piper Jaffray analyst has raised the target price for Google shares to hit $600 this year(from about $435).... all this obviously riding on the paid search boom!

Meanwhile, the Search Engine Marketers Professional Organization (SEMPO) in a release states that search engine marketers spent $5.75 billion in 2005! Obviously, affiliates like us would have contributed a not-so-insignificant sum to this figure.

What all of this indicates is that paid search marketing seems to be working really well for the marketers. At the same time, the question that one must begin to ask seriously is, what would be the tipping point? Is there an over reliance on search, and if yes, can it be avoided at all? Most importantly, even as search marketing grows and inevitably becomes more competitive and pricier, how can marketers, in particular, affiliates, ensure that it remains a cost-effective and profitable form of marketing. (That's precisely one of the reasons for the development of our own TJ Optimizer software, to help marketers continuously monitor and profit from their search marketing campaigns).

Irrespective of what software and analytics we use, ultimately it will be the profitability that will count; else, we'd just be losing contributors to those rather impressive set of numbers and projected share prices.

Until next time,

Ben Flux

posted by Ben Flux @ 1/10/2006 11:47:00 AM