Google Ad Network Poised to Grow

NEW YORK Google’s advertising network will grow substantially in 2006, according to an investment bank, as it expands its performance-based auction system to other media.

Piper Jaffray made the growth of Google AdWords a main justification in raising its price target for the stock to $600, up from its previous $450 target. At $600, Google would have a market capitalization of about $177 billion.

“We believe Google is an iconic company that, like Microsoft and eBay before it, has defined a new and vital industry,” Piper Jaffray said in a research note.

Google has begun testing the expansion of AdWords, which currently lets advertisers run search and display campaigns. It has begun a program to buy print ad pages and resell the space to its advertisers.

Piper Jaffray also sees big opportunities from Google Base, the Web database Google is building of all manner of user-created information, from cooking recipes to apartment listings to protein databases.

Advertisers will pour more money into search, according to Piper Jaffray, leading to a 37 percent compound average growth rate over the next five years, and benefiting Google more than other search players.