With the recent 'Florida' update on google & its impact on the SERPs, typically on the commercial search phrases, it has become imperative that we now examine paid advertising scenario at google. For scores of merchants, now paid advertising will be the only way to help them salvage their holiday sales, as also future revenues. This will be a two parts article, with the first part focusing on the google paid advertising space & the second part on the best practices thereof. However, before we start on googles adwords & adsense programs a word or two on online advertising industry performance in 2003.

Online Advertising Industry:

According to the Interactive Advertising Bureau (IAB), the online advertising industry sales have been robust this year with three consecutive quarters of growth witnessed for the first time in last two years. Lets first look at the yearly sales figures for last three years. Online advertising climaxed in 2000 with $8 billion in revenue (dot com boom) before declining to $7.1 billion in 2001, and $6 billion in 2002. This year in the first three quarters, the sales have been estimated at a healthy 5.07 billion (up 13% from the same period last year). The break up of the quarterly sales figure is as under:
• The first quarter sales have been at 1.63BUSD
• Second quarter is pegged to have clocked 1.69 billion (up 14% from same quarter last year)
• Third quarter is estimated to have done 1.75billion.( 20% growth from this quarter last year)
According to IAB, out of the 6bUSD figure of 2002, 15.4% (or roughly 1 billion) can be attributed to Search term related sales. This is up 200% from the figures of 2001.

The contribution of search term related ads has been estimated to 31% of the second quarter figures. No break up for third quarter figures is however available. Financial firm Salomon Smith Barney expects the estimated $1.4 billion market in 2003, to grow 30 percent to 35 percent per year, reaching $5 billion by 2008.

This Advertising space is dominated by two major players (obviously): Google & Overture.