Net Ads Golden to Google

Google (GOOG Quote) continued its journey back to $200 Monday, thanks in part to an encouraging online advertising report from Goldman Sachs.

Shares in the paid search phenomenon rose $5.78 Monday to $198.57, continuing a rally that has added 17% to Google's share price since Dec. 8. Shares in Google, which went public in August at $85 a share, peaked at $201.60 Nov. 3 before falling as low as $161.31 later that month.

Boosting Google's shares Monday was a report from Goldman Internet analyst Anthony Noto, who raised his fourth-quarter advertising estimates on both Google and Yahoo! (YHOO Quote). Yahoo!'s stock rose 24 cents to $37.92.

In his report, Noto says the paid search advertising sold by Google and by Yahoo!'s Overture Services is benefiting from the quantity of searches and the prices that advertisers are bidding for advertising keywords, both of which are better than expected.

But Noto pays much greater attention in his report to the state of branded online advertising -- the banners and other pictorial ads, including animation and video -- rather than the text ads that are keyed to Internet users' queries on search engines, or to the editorial content of a page in which the text ad appears.

On the basis of conversations with media buyers in mid-November and mid-December, Noto concludes that, as far as branded online advertising is concerned, it's "a heavy, heavy ad market."

Demand -- particularly from seasoned online advertisers rather than new entrants -- is increasing, says Noto, particularly for more elaborate advertising, also known as "rich media," and particularly for placement on major portals, starting with Yahoo!.

"We believe that branded online advertising," writes Noto, "is ... beginning to transition from a test or trial marketing tactic for large branded advertisers to a more permanent component of the overall advertising/marketing mix."