• by Mark Naples , January 9, 2004

Back in August, I made some predictions about what to expect in 2004. The three I focused on were the following:

1. Rich Media, already the darling of "why our business is growing," will become much more. By Q304, 55+ percent of all ads served on the major portals and top-50 sites will be Rich Media.
2. Newspaper Web sites will continue to enjoy a robust increase in revenue and prestige in the overall media mix. And
3. People who should know better still will not understand online Privacy.

So far, it seems, so good. Rich Media continues to grow in terms of volume of ads served and also in terms of numbers of sites and advertisers using it. Major newspaper Web sites have seen their ad revenue grow across the board quarter on quarter, and online privacy remains a conundrum for most consumers, even as increased publicity on identity theft and other evils is growing.

One thing I left out of those predictions is the role of Natural Search in the whole Search Marketing Mix. As consumer eCommerce surged more than 30 percent over last year's Christmas Holiday season, and Google has become so culturally top of mind that "to Google" has invaded the lexicon of television shows such as "Sex and The City," it seems that everyone is talking about search and about Google's anticipated $15 billion IPO. Could it be that this will be the event that jump-starts our digital economy again, and gets even more money invested on the Web?

Maybe - maybe not. Here are a few reasons why it may not, and also why what we regard as natural search may really dwarf paid search, in terms of pure dollars, by the end of the year.

The first reason is Yahoo!'s expected announcement to drop Google in 2004. Yahoo! has not made public the timing or the extent of this drop. But even if the only impact on Google is a significant drop in their distribution for their Adwords and Adsense products that would be a major blow to Google's revenue.

Additionally, there has been not so much coverage of the dicey legal issue that Google has faced in France. This is such a dangerous case for Google, that they have petitioned the court to rule without a case being filed, in order to subdue what would certainly be a media circus, not to mention to keep as much of their secret sauce under wraps as possible.

If Google is required by the French Court to prohibit use of trademarks and trade names by advertisers seeking to drive clicks, this will have a dramatic impact on Google's ad revenue. Since Google allows use of non-affiliated marks and names, and even encourages usage based on click and search analysis, they may bear significant liability to the trademark owners. Even if they bear no liability and all the French court does is issue a cease and desist, what will that mean for Google's revenue model?

Let's face it - paid placement is under fire. Think about how this controversy would trickle down to other companies on the Web who have been propped up by paid search and paid placement products. You can bet that Overture is not the only company that is watching this drama unfold very closely.

This increased scrutiny of what comprises paid search and paid placement is just one key reason why natural search will continue to grow unabated. As more Fortune 1000 companies begin to understand that the effects of well-executed natural search optimization on their sites can be longer lasting and more cost-effective, and as more cutting edge optimization processes are productized, I anticipate that we'll see the launch of numerous cool, natural search products by year end that aren't even on the radar yet. Regulatory scrutiny of paid products will only enhance this trend.

Of course, I could be wrong. Maybe Google will file their S1 tomorrow and have a record breaking IPO in mid February. But, I doubt it.