Search Engine Term Prices Shoot Up

Rhett Pardon
LOS ANGELES — Once sold for pennies per click, many search terms and phrases are skyrocketing in price, rising as much as 80 percent from year-ago figures.

Minimum prices for key words start at 10 cents on Google's AdWords and Overture but can also command stratospheric prices.

This holiday season has garnered the highest search prices ever — for instance, “holiday business card” was priced at $18.90 per click, while “business Christmas card,” “corporate Christmas card” and “holiday corporate card” fetched $10.50.

Those pricey numbers give in to the fact that online searches have become such an effective marketing tool that there are many companies that will pay any price for new business.

Webmasters and online marketers, who bid against each other to secure rights to the terms for certain periods of time, are expected to spend a record $2.6 billion on paid search services in 2004, and next year that figure may rise to $3.2 billion, according to a recent study by JupiterResearch.

Search engine advertising is dynamic in a real-time manner, and competing online marketers buy up collections of different search terms and phrases and then watch in real-time as consumers respond to them, according to John Burke, head of technology commerce at Google.

“It's not about a flight [of standard advertising] and analysis of results,” Burke said. “It's about ongoing optimization and adjusting campaigns on the fly.”

But “on the fly” comes at a price. The search engines say that neither the price nor the action of search engine advertising is static, and marketers don't know the true value of a search term or phrase until they experiment with it live and their company checks on their return on investments.