Does Google Lose Market Share as Web Advertising Grows?

Interesting analysis from online REPORTER:

"For the past few years, Google has lorded over online media and advertising, but according to recent data other media companies might have a fighting chance for more market share.

In its quarterly wrap-up report, researcher IDC says total US Internet ad spending in the fourth quarter of 2007 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 US market share declined for the first time in two years due to slower growth in domestic fourth-quarter sales. The market leader’s net US Internet advertising market share was down 0.5 percentage points to 23.7% last quarter compared to Q3 in 2007.

Google’s estimated net US 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%. It doesn’t sound like much of a decline, but it might be good news for Microsoft and Yahoo if they merge.

February 16-22,2008

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What's been said:

Discussions found on the web:
  1. John Borchers commented on Feb 28

    Problem with GOOG and YHOO Barry is pretty simple. Think about how many times you actually click an add?

    There’s no demand to see most of the ads.

  2. Donny commented on Feb 28

    It’s easy to make the case that, Google, is a media company.

    And John, there is high demand to click on advertisements when the banks were giving away free subprime money. I know, because we were once all filthy rich down here in Orange County, Ca … we got that way by buying and selling homes to each other as well as a whole lot-a MEW.

  3. John Borchers commented on Feb 28

    The second part of it is these add on softwares. Both YHOO and GOOG have add on for web bars that no one wants through video softwares like DivX.

  4. Sweety Pie commented on Feb 28

    Gots to love the agflation.

  5. Bob_in_MA commented on Feb 28

    When the last ad downturn came, and all the dot-coms were imploding, ad revenue contracted, but people thought somehow Yahoo would come out swell because they had so many big-name, mainstream advertisers. Well, a few months later, guess what?

    I had a Web site at the time. My ad revenue fell about 90% in six months.

    I (like Yahoo) learned something new: the first thing businesses cut in a downturn is advertising, because it’s easy, compared to laying off employees, closing facilities, etc.

    The first thing I did was set up some subscription services and diversified my revenue.

    Google gets a huge proportion of it’s revenue from ad sales and we are headed into a recession. They are about to learn the same hard lesson.

  6. wunsacon commented on Feb 28

    In the past year, I personally began “searching” in Wikipedia directly for more information. Who needs to find “the best of 10,000 shitty web pages” when one pretty good web page is close at hand?

    If this is a trend, it won’t be good for google.

    To survive, they have to innovate. (They’re trying…)

  7. stapleton commented on Feb 29

    The market leader’s net US Internet advertising market share was down 0.5 percentage points to 23.7% last quarter compared to Q3 in 2007.

    Am I reading this correctly? Of all the money spent on internet advertising in 2007 Q4, 23.7% went to Google? Is that right?

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