The future is looking bright for the paid search advertising industry.

Studies show search engine marketing spending in the United States “soared” to new heights in 2003, rising a whopping 123% over spending in 2002.

2002 was a good year for search engine marketing, with money spent totaling $923 million. However, that figure grew to an impressive $2 billion last year – and it didn’t stop there, judging by information gathered from eMarketer’s Search Engine Marketing Report.

While growth might slow down in 2004, paid search is expected to increase at $0.5 billion intervals over the next two years, remaining important to the online advertising industry.

It is believed that local appeal will ultimately determine the future of paid search. Search sites are being advised to “create products designed and priced to appeal to local advertisers.”

"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."

However, it is important for e-Business professionals to keep in mind that search marketing is not a Yellow Brick Road to online success. Optimizing websites for search engines is still extremely important. "Behind all search marketing is an effective Web site," Hallerman says. "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."

What do you think 2004 will hold for paid search? Do you believe search engine optimization is still just as important as ever?

Hi Brittany,
I have noticed that some of my clients, who have text links on a keyword/phrase are dropping from the Google rankings, if that same keyword/phrase is also a 'sponsored link'.

It seems as if google is saying "somebody has paid us to be on page 1 for that keyword/phrase, so you can't have a good ranking from it, unless you pay also."

I'm not sure if this is the case or not, however, with google planning to float itself on the stock market, it would be (kind of) logical for them to increase their revenue by getting more sponsored links. The harder we (seo's) find it to get to page one on the desired search terms, the more likely our clients are to buy sponsored links, and therefore, increasing Google's value.

I am currently running an experiment in order to either prove or disprove my hypothesis on 'text links v. sponsored links', and will report back with my findings.

The simple fact with any organisation that gets dollar/pound signs in it's eyes, is that profit always comes first and customer/user/product comes... well.... about tenth.

The future of the paid search looks very bright indeed, for the search engines, as for the rest of us........er?

The 'experiment' mentioned above didn't make any drastic changes to draw any firm conclusions from (so far), However, it's still ongoing. Just with less hope of a result!