Search came into its own in 2004, but will 2005 be as rosy without the Olympics and the election?

The purpose of this week's Interactive Advertising World conference in New York is to promote the Web as an attractive medium for both consumers and marketers. Growth and potential stand center stage and speakers after speaker present the future in a rosy light.

Timed for release at the opening of the conference, the Interactive Advertising Bureau's (IAB) first half revenue report did just that. It says that 2004 has been a banner year for the interactive industry so far, and projects that it will get even better before the year's end.

Geoff Ramsey, eMarketer's chief statsmaster, joined several other experts in a number of discussions during the show that put some hard data behind the excitement.

At the outset of the first day, he quoted Starcom's Rishad Tobaccowala, who recently said, "Those marketers who aren't interested in online may be out of a job soon if they don't prepare to engage the empowered consumer."

Indeed, based on data from myriad researchers, eMarketer predicted that online will continue to grow by 23 percent in 2005, with most of that growth coming from retail, pharmaceutical and consumer packaged goods marketers.

Deutsche Bank Securities analyst Jeetil Patel, however, cautioned that growth rates will likely decelerate a bit in 2005, as 2004 spending is buoyed by both the Olympics and the presidential election.

Analysts are declining to predict just how much of a deceleration the industry is in for, but one thing they agree on -- search will continue to grow.

As Rob Middleton from Fathom Online said, "Search has proven it can be very successful with small businesses," and because the number of people shopping and, more importantly, buying online continues to grow, it's obvious that search is a contributing factor to that growth.

Ramsey also added that we're "just beginning to see local search come into its own." While the total volume of searches is growing, he doesn't expect that to increase dramatically over the next six to 12 months.

So where's the growth going to come from? It's going to come from pricing.

Middleton predicts that prices are going to increase. The good news is, he says, is the ROI is still extremely competitive for clients. Also, part of why search has been so effective to date is that it was still largely undiscovered by both consumers and advertisers back in 2001 and 2002, but now marketers "have to be diligent and make sure you're not overspending."

Ramsey thinks that what can really drive local search is "pay per call." He says that many small mom and pop operations still don't have Web ssites, but "if you're engaged in a program so that you're paying to get a call on an 800 number, that can really take off."

New sectors of search are also moving to the forefront.

Ramsey says that the travel category has a high Net centricity factor (the percent of total business of a category that's done online) because travel is a high ticket item with lots of attached information. Other categories where you see a lot of people shopping are where you see a lot of search activity.

Middleton agreed, adding that this is the first year we've heard a lot of big automotive pitches going on by companies where online isn't as directly tied to their sales funnel. "It's starting to catch on."