The average amount spent on keyword advertising increased by two per cent in the fourth quarter of 2006, compared with rapid growth in the preceding three months, a report has claimed.

Research company Fathom Online revealed in its Keyword Price Index that the average spend per keywords is now 77p, up from 75.5p over the quarter.

However, figures for the third quarter showed a 16.5 per cent increase from the previous value of 64.8p.

Year-on-year the growth in keyword spending was about four per cent, with poor second-quarter performance negating much of the third quarter acceleration.

Dean DeBiase, chair and chief executive officer of Fathom Online, said: "Despite the long-term upward trend of keyword prices, advertisers can mitigate the price increases."

He added that this may be achieved by "managing their search marketing initiatives more aggressively through technology and analytics".

This, he claimed, is of increasing importance to ensure a continued return on investment for keyword marketing campaigns.

A recent report from industry analyst eMarketer predicts that the online advertising market in western Europe is likely to grow by about 25 per cent in 2007 in monetary terms.