That's the theme of an article in the Sydney Morning Herald yesterday, although it's a good 'scare' story generated by some SEO PR. The point being that the overall dominance of Google as the search tool of choice for Australians means that rankings here are vital and, in turn, there will be more competition for PPC positions which will push up the average bid prices.

Two figures are important here - one is that Google holds nearly 90% of all Australian search traffic, according to Hitwise, and also that the last annual Internet advertising spend figures showed that paid search advertising held a 40% share of the $1 billion market in 2006. This volume of spend continues to rise and so it's no surprise where most of the activity will be focused on.

This market dominance of Google is seen in many countries, although ironically it's in the US where Google has more competition, claiming only 62% of the search market, followed by Yahoo! at 25% and then MSN, Ask and others covering the remaining 13%.

Of course there are now more website owners who can see the need for effective online marketing and, with search as the 'high street' of online activity, it's the natural reaction for these advertisers to target Google and to start off with PPC advertising. As more entrants use this technique and bid for higher positions, then the average bid prices will escalate, which would be expected as the market matures.

At some point advertisers will find the point of negative ROI, which can be determined by a range of factors including product offering, pricing and website usability. And so a natural level will be achieved where some advertisers with deeper pockets may look at longer-term value and brand building, whereas other advertisers will have to review their strategy and consider an alternative approach.

One of these alternatives is to achieve 'natural' search rankings through search engine optimisation. These positions can achieve better clickthrough rates at a lower cost but are harder to achieve, with more websites now being optimised for rankings and with a combination of on-site and 0ff-site factors playing a part. However, all websites should be working to a long-term optimisation strategy as well if they want to remain serious players in the online market.

The article claims that, while Australian Internet users were nearly as sophisticated as Europeans and North Americans in their search techniques, Australian advertisers were about 2 years behind these regions in their marketing techniques.