The sky is falling.

Search-based advertising is simply not sustainable. Why? 

First, traffic to search engines has been pretty flat over the last year and will continue to be. See this chart from Compete.com that confirms this pretty clearly.

The trend is even more diagnostic if one looks at the number of page views per visit.

In its most recent 10-K statement, Google claims that its increased revenue is "primarily from an increase in the total number of paid clicks." If the number of monthly unique visitors and number of pages/visits have been pretty flat for a year, the total number of paid clicks must have come from greater clicks from existing visitors. 

Second, growth in blogs has slowed down and will continue this trend. See the growth in the number of unique monthly visitors to technorati.com, wordpress.com and digg.com below.

Even though wordpress.com has really grown cumulatively, the rate has slowed considerably since November 2007. This might be the beginning of a great slowdown that will drive down the number of people visiting blogs. 

This pessimistic summation is because I see a slowdown in the number of visits to search engines and growth in content (especially blogs). 

What does all this mean if you are an advertiser?

1. Higher rates. The math is simple. If the supply of content and visitors slow down, as competition among advertisers for keywords goes up, rates are likely to trend higher. This means more money for search engines and lower effectiveness for advertisers.

2. Poor targeting. Pay attention to the superclickers. They are the folks who are easy to target. But, they cannot be everybody's customer! So it is going to prove difficult to target people that you want to go after (e.g., women 18-45, working professionals). 

Pay heed! The sky is falling! 

Sandeep Krishnamurthy is associate director, graduate programs and associate professor of marketing and e-commerce at University of Washington, Bothell.