NEW YORK (CNN/Money) -
Janyte Bullock and her husband Andy are small business owners who had a Google epiphany back in 2002.
"We started in 1982 as a mail-order company selling Native American handicrafts and then went online in 1998. But we never had enough money to advertise our business in a big way," said Bullock.
So the couple turned to Google.
Bullock, who runs the 6-person Attleboro, Minn.-based Wandering Bull, said the company spends no more than $50 a month for sponsored text ads on Google.
"Every time our ads are up we get a lot of traffic on our site," said Bullock, adding that the company's sales are up almost 50 percent since 2002.
The power of search-based ads isn't lost on Shawn Vincent either.
"We spend about $2,000 to $2,500 a month on search-based advertising on Google and Yahoo. But we get 20 times more a month on sales," said Vincent, vice president of Orlando, Florida-based Tape Monster, a wholeseller of industrial tape.
"The search-engine ads work great for us because they're cheap and we can track how many people are coming to our site," said Vincent. "You can't do that with print ads which are so much more expensive."
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 Google files for its IPO, the most highly anticipated stock sale in the post-dot.com era. CNNfn's Allan Chernoff reports.
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On Google, advertisers pay anywhere from a few cents to a much as $100 for "key words" such as "duct tape." A search on duct tape pulls up a number of sponsored text ads on the right-hand side of the search listings. Google doesn't get paid for the ads until someone clicks on them.
At the same time, advertisers pay a little more if they want to secure a position among the top three ad slots.
While small businesses like Bullock's and Vincent's have unlocked the power of Google, industry watchers say it's only a matter of time before retail's big guns follow suit.
Big, and growing
According to Jupiter Research, search-engine based advertising is a $2 billion market that accounts for about a quarter of the total online advertising market.
Analysts predict that it has the potential to grow to about $6 billion over the next few years, led by the three major search providers Google, Yahoo and MSN. Google, the market leader, on Thursday announced its much-anticipated $2.7 billion initial public offering (IPO). In it's filing with the Securities and Exchange Commission (SEC), the company revealed that the search ads generated as much as 95 percent of its revenue in 2003.
"Retailers are a cagey bunch. They don't do anything until they get a return on investment (ROI)," said Paddy Freeman, analyst with Jupiter Research. "The search-engine ads deliver the highest ROI for their marketing effort."
Chris Sherman, editor of SearchEngineWatch.com, said that the even though search-engine advertising traditionally has been dominated by the smaller marketers, retail heavyweights like Wal-Mart and Target could soon bulk up their presence.
"Bigger players have multi-million ad budgets. The fact that they have to bid a couple of dollars on key words isn't so attractive to them. However, they can't ignore the size and reach of the audience," said Sherman.
"Once the big guys get in, that will drive up the prices. We could also see big retailers buying not just one or two sets of key words but hundreds of words and effectively block out the competition," he said
Charlene Li, analyst with Forrester Research, agreed with Sherman.
"There certainly are some obstacles to big advertisers but that won't hold them back. Wal-Mart may not buy every single word that describes all the products that they sell but it would make sense for them to bid on key words like toys, which is a huge business for them during Christmas."
Li anticipates the search-engine advertising market could increase by 5 percent to 10 percent a year for the next four to five years before the growth levels off.
Neil Kugelman, owner of New York-based jewelry e-tailer Goldspeed.com says Google's IPO could be both good and bad for small businesses. The company allocates about 80 percent of its advertising budget -- which he says is in the six-figure range per month -- to paid search ads on both Google and Yahoo.
"We tested all kinds of advertising when the company was founded five years ago. Nothing worked except Google paid ads. But we also feel that we're a part of their success story and now we can have a chance to own a part of Google," Kugelman said.
Nevertheless, he's worried.
"Until now the advantage of Google's search ads was a secret that not too many big businesses knew about. All this hype about Google is going to open the floodgates," said Kugelman. "We're already battling major retailers like J.C. Penney and Wal-Mart for ad space and our average cost per click has gone up about 30 percent over the last year. We think it could go up even more as more mass merchants start competing with us."
Google did not return calls for comment. Yahoo! and Wal-Mart could not be reached for comment.
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