Search engine marketing in Europe is expected to reach 1.4 billion euros this year, a 65 percent increase over last year's 856 million euros, according to "Europe's Search Engine Marketing Forecast, 2004 to 2010" from Forrester Research, ClickZ reports. And the market is forecast to reach 3 billion euros by 2010. In the report, SEM refers to paid search listings, contextual search, site optimization and paid inclusion.

The U.K. has a commanding SEM lead in Europe.

U.K. businesses budgeted more than half their online adspend on search in last year, and spending this year expected to reach 763 million euros. France will account for 19 percent of European SEM this year. Germany is third, having spent 165 million in 2004.

Although the report forecasts SEM will build through 2007, a decrease is forecast to begin in 2007, in part because rich media ads will come into play with further adoption of broadband in the European market, and the cof keywords is expected to increase, cutting into ROI.