Feb 15, 2008

Google Losing Online Advertising Share?

A recent report from IDC indicates that Google’s Internet Ad Share is slipping while Online Ad Spend Rises 28%: USA Internet ad spending in 4Q07 grew nearly 28% over the same quarter in 2006 to $7.3 billion. For the full year 2007, online ad revenue grew 27% year over year to $25.5 billion. IDC research also found that Google's net USA market share declined for the first time in two years due to slower growth in domestic fourth quarter 2008 sales. Google's net USA Internet advertising market share was down 0.5 percentage points to 23.7% in 4Q07 compared to 3Q07. Google's estimated net USA Internet advertising sales (excluding the traffic acquisition costs they pay out to the partners in their networks) grew by a little more than 40% in 4Q07, but its year-on-year growth rate in the quarter before had been 50%.

Since Microsoft made the $40B+ offer for Yahoo - the Online advertising industry has been in the spotlight. A potential merger between Microsoft's Online Services Group and Yahoo would create a global Media organization which would control over 15% of the US Online advertising market. Expect that figure to grow, as the new organization starts to promote an unprecedented mix of online assets to an advertising sector, eager to bring more of their marketing budgets online.
Google would still be the "King of Search" - however, display advertising would take on a whole new level of importance. Microhoo! would be competitive in Search - both in terms of algorithmic search and monetization through distribution deals. As for Google, unless it can find a new differentiated revenue stream - it's best days could well be, right now..........

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