Paid Search grows and IBM enters Enterprise Search

Paid search is expected to grow faster than any other sector of online advertising, increasing from $2.6 billion in 2004 to $5.5 billion in 2009, according to a new study.

In addition, the search market is expected to become more specialized, as search focuses more on specific categories, according to JupiterResearch.

Specialized search in four categories--retail, financial services, media and entertainment, and travel--accounted for 79 percent of the paid search market in 2004, Jupiter said. Jupiter predicted that the online travel market will grow from $54 billion in 2004 to $91 billion in 2009, for instance, and online shopping will grow from $66 billion in 2004 to $130 billion in 2009.

But fearing a slowdown in online advertising, an analyst downgraded the stocks of search giants Google and Yahoo.

"We had hoped that momentum in paid search from the fourth quarter would carry through to first-quarter results," Jordan Rohan, an analyst with RBC Capital Markets, said in his research note on Yahoo. "But now we believe otherwise."

In the case of Google, Rohan projected the company would increase its first-quarter revenue 5 percent from the previous quarter, rather than the 13 percent jump he previously forecast. Wall Street expects the company to generate a 13 percent increase.

While uncertainty rules the Web search market, IBM's mission to spice up corporate search and become a "Google for the enterprise" continues in earnest. By the end of the year, Big Blue intends to release an update to its corporate information-management tools, which are designed to bring order to potentially thousands of data sources in a company's network.

Code-named Serrano, the product will use technologies including artificial intelligence and data mining to derive more meaning from corporate documents. It will also have a revamped search engine and front-end tool designed to make hunting for company information as straightforward as searching the Web, according to IBM.