A new report issued by Merrill Lynch this morning predicts that thanks, in part, to the rise on broadband adoption, sponsored search will increase by 47% this year. The report predicts a year-end tally of around $5.1 billion, up from $3.5 billion last year. Combine those numbers with paid inclusion and the total ($5.5 billion) makes up 45% of the total estimate for the online ad market in 2005.

So how is it that broadband is impacting these numbers? Lauren Rich Fine, first vice president at Merrill Lynch explained in the report that "...search volume growth really has been the bigger driver of growth in paid search advertising in late 2004 and into early 2005. We believe this trend will continue as broadband subscription prices continue to drop, more users move to broadband connections, and ultimately conduct more queries."

It makes sense...as users move to broadband connections the Internet becomes easier to use. Sitting around waiting for the results to a query on a dial-up connection is a big deterrent to heavy search engine use. Additionally, broadband frees up the phone line, which allows for more frequent Internet usage in multi-occupant homes. The increase in broadband usage will also help drive an increase in multimedia searches, which provide more inventory space for pay-per-click ads.

How does all of this impact the small business market? It's a fairly simple equation - more searches equals more chances to reach your target audience. There are still several industries out there that have been slow to adopt search engine marketing strategies. Manufacturers and niche businesses often have the opportunity to dominate the search results for high ROI terms simply because none of their competitors have managed to get online yet.

If you are one of those companies and you've been dragging your feet about search marketing, you need to get in gear. It is far easier to enter the market early and keep your spot at the top than it is to play catch up. As the market expands and more and more people head online to research products and services, the areas that are not yet searched for will be. Putting some time and effort into making sure that your web site is the one that they find could turn out to be one of the best marketing investments that you ever make.

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