NEW YORK, NY (October 17, 2006)—As Yahoo! and Google report their third-quarter earnings this week, eMarketer's new estimates of US full-year advertising revenue, growth and market share for the two companies can help put their earnings in perspective.
Google's US ad revenue growth rate in 2006 will soar almost 65% over last year's. Yahoo! still shows a respectable 17.5% growth rate, an increase that would satisfy most companies. But not one competing against Google. Just a year ago, Google and Yahoo! both posted US ad revenues of more than $2.4 billion. For the full year 2006, though, Google at $4 billion in ad revenue will eclipse Yahoo!'s ad revenue of $2.9 billion.
These numbers are particularly dramatic when considering market share of total US ad revenues. In 2006, for the first time, Google is expected to pocket one-quarter of US Internet ad revenue, while Yahoo!'s share drops to 18%.
These growth numbers establish Google as the unrivaled king of the online advertising universe, and leave Yahoo!, with its greater advertising diversity and years of media experience, struggling in second place.
"By gobbling up YouTube last week," notes David Hallerman, eMarketer senior analyst, "Google acknowledged that even though paid search gives it a robust revenue stream, that alone won't be enough to compete against Yahoo!, MSN and other major players in the years to come."
When analyzing the ad revenues of search engine companies, it is important to determine whether the numbers cited include the traffic acquisition costs (the amounts paid by search engines such as Google and Yahoo! to the sites where the clickthrough ads appear).
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