According to Safa Rashtcy a senior analyst at investment bank Piper Jaffray, search revenues will increase by a staggering $18 billion over the next five years. Projected revenues are expected to surpass $10 billion in 2006, $13 billion in 2007, $16 billion in 2008, and $19 billion in 2009. By the end of the decade, revenues generated by search are projected to be in the $25 billion range. A report issued yesterday by search industry research and analysis firm Outsell says this growth is coming at the direct expense of the largest traditional media firms. Google and Yahoo combined generated about $6.5 billion in revenues last year. The year before, their combined revenues equaled about $2.5 billion. In other words, the combined growth of the two largest search firms over 2004 surpassed the combined growth of the 10 largest traditional media firms.

According to the Outsell report, there is an imbalance in ROI between traditional advertising and paid-search marketing resulting in a situation where traditional ad-purchases cost far more per converted sale than online advertising. Advertisers are paying too much for the returns gained in traditional advertising while paying less for better returns from paid-search advertising. Search marketing has long been promoted as the most cost effective means of communicating to a massive audience that continuously pre-qualifies itself. Increasingly, the search engines are using information about specific users to individually target advertising based on the known habits of those users. That's a neat trick traditional marketing venues simply can't perform