Industry Overview: The preferred advertising model has decidedly shifted to Pay-For-Performance, spurring the creation of the Pay Per Click (PPC) search market. The PPC market has emerged as a viable and a more effective alternate method for advertisers to get to their consumers via the web. Advertisers are involved in a bidding process where they specify the per-click fee they are charged for preferred placement of their search listings on a PPC search engine. The Web sites offering the highest bid for particular keywords and key phrases appear first on the list of search results. This cost-effective, pay-for-performance model creates an efficient advertising market that enables advertisers to pay only for those select customers who click through and land on their sites.
Since the unbridled growth of the dot-com frenzy, which peaked and reversed its trend in January 2000, no Internet sector showed as much promise and tangible positive results as the PPC search market. When it comes to offering companies the highest return on their advertising dollar, PPC search is definitely a marketing outlet contender to be reckoned with. With internet becoming a major place for online shopping, marketers are increasingly using the Internet to reach millions of consumers. The unique advantages inherent in PPC search is the advertiser’s ability to reach interested consumers who are actively searching for specific products and services. This enables advertisers to reach consumers in a most cost-effective manner and increase their return on investment (ROI). PPC search has also been found to be a much more effective advertising method than traditional banner and pop-outs. PPC search marketing, marked by rising advertiser adoption, technological advancement, and incredible growth potential, has quickly claimed a leading position within the online advertising industry, becoming one of the hottest online advertising sectors.
While it is difficult to pinpoint the exact size of the paid search market, there is a general professional consensus that dubs the industry as a major growth market. According to Salomon Smith Barney, Internet search and related services is estimated to be $2.6 billion in 2004, with an annual growth rate of over 20 percent through 2008. According to U.S. Bancorp Piper Jaffray’s Senior Analyst, Safa Rashtchy, the paid search market will reach nearly $7 billion in worldwide revenues by 2007, growing at a compounded annual rate of 35 percent. As more online advertisers are turning to performance-based advertising solutions to fulfill their Internet marketing objectives, PPC search is quickly growing as the marketing solution of choice.
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