The amount spent on sponsored search listings will increase 47 percent this year-to around $5.1 billion, from around $3.5 billion in 2004, predicted Merrill Lynch in a report on Internet advertising recently. Paid search and paid inclusion together will likely reach $5.5 billion this year-which represents 45 percent of Merrill Lynch's estimate for the total online ad market in 2005.Much of the growth will stem from the rise in broadband adoption-which,will result in more queries to search engines. "[S]earch volume growth really has been the bigger driver of growth in paid search advertising in late 2004 and into early 2005," stated the report adding that this trend will continue as broadband subscription prices continue to drop, more users move to broadband connections, and ultimately conduct more queries."
The investment house specifically predicted a 20 percent increase in query volume for the year, adding that the surge has already begun. A Merrill Lynch analysis of data from comScore Networks revealed that the volume of queries per user grew between 16 and 18 percent in the first quarter of this year, compared to between zero and 4 percent a year ago. Merrill Lynch continued to predict that online advertising would reach $12.4 billion this year and $25 billion by 2009.
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