Jupiter announced that paid search led the online advertising rejuvenation of 2004, rising 34 percent in the year. Jupiter's Gary Stein also predicted the general online ad market would about double to $16.1 billion in five years, which represents a significantly slowed growth rate. Paid online display advertising grew 27 percent in 2004 and, combined with paid search, will overtake magazine advertising in gross billings in 2007. At that point, online ads will represent on of every 16 dollars spent on advertising. More…

Stein attributed a rise in costs per click as one of the main reasons growth will slow in the paid search category. Jupiter's figures show click costs growing from an average of $0.29 in 2003 to $0.36 in 2004. The firm predicts those costs will continue to rise apace, hitting $0.40 per click in 2005 $0.42 in 2006.