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April 20, 2006

Google pulling away in Internet ad share

Posted by David Hunter at 1:43 PM ET.

The Fortune profile of Ray Ozzie mentioned on Tuesday reported veritable drooling in the Microsoft executive suite over the potential rewards from Internet advertising. But how are things going today? Maya Roney at Forbes reports the current state of play in Google Maintains Lead In Search, Ad Growth:

Global advertising could grow 35% in the first quarter of 2006, with search advertising growth continuing to outpace branded and Google continuing to lead in market share gains, according to a recent Merrill Lynch report.

The analysts expect Google to increase its advertising share in the first quarter to 30%, up from 28% in the fourth quarter of 2005. Yahoo!, Time Warner AOL and Microsoft MSN will likely lose advertising share as the first quarter is not a strong branded quarter, they said.

The distinction here is between direct sales of display ads on the companies’ own “branded” content sites (e.g. the recently announced Microsoft deal) versus ads appearing with the results of the respective search engines. Google isn’t a strong branded content provider although they are trying, and conversely, the others have strong content offerings, but are weak in search (AOL, of course, uses Google). Related to search advertising is Google’s lead in contextual ads placed on 3rd party Web sites since Yahoo and Microsoft aren’t even out of the gate.

As an example of the battle for branded advertising, see Making Money From Online Maps which describes how Yahoo and Google are duking it out for a distant second place in online mapping with Time Warner AOL’s Mapquest still the reigning champ.

Finally, while Google may be the only one gaining share, a rising tide lifts all boats as Yahoo demonstrated in its earnings announcement yesterday:

Yahoo, the chief rival to Google Inc. in the market for Internet search advertising, saw revenue in its branded and search advertising businesses rise 35% to $1.38 billion, as more consumers and businesses pay to have their ads displayed next to search results. Anthony Noto, an analyst at Goldman Sachs, estimates that search sales grew 9% from the previous quarter.

Sue Decker, Yahoo Chief Financial Officer, would not confirm whether that growth rate was accurate, in an interview with MarketWatch.

Filed under AOL, Advertising, Coopetition, General Business, Google, MSN, Microsoft, Yahoo, adCenter

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One Response to “Google pulling away in Internet ad share”

  1. Google wows Wall Street -- Microsoft News Tracker Says:

    [...] Google underscored my post yesterday on its leadership in the burgeoning Internet ad market when it announced spectacular quarterly earnings after the market close. Jonathan Berr at says Google Blows the Doors Off: Google walloped first-quarter earnings estimates Thursday, sending its shares up 6%. … For the quarter ended March 31, Google made $592 million, or $1.95 a share, up from the year-ago $369 million, or $1.29 a share. Gross revenue rose 79% from a year ago and 17% sequentially, to $2.25 billion. … “We basically have good news across the board,’’ CEO Eric Schmidt said on the company’s postclose conference call with investors. … “It looks like to us that we are continuing to gain market share,’’ Schmidt added. … Google-owned sites generated revenue of $1.30 billion, or 58% of total revenue. That’s up 97% from last year and up 18% sequentially. Google’s partner sites generated revenue, through AdSense programs, of $928 million, or 41% of total revenue. That’s up 59% year over year and up 16% increase sequentially. [...]

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