Google retains nearly three-quarters of the market
Google continues to have a tight grip on the US search advertising market, and Microsoft’s foothold may be weaker than previously thought, eMarketer believes.
Google raked in $12.79 billion in net US search ad revenues last year, or 73.8% of the total market, eMarketer estimates in its latest forecast. The company’s share will remain constant this year, eMarketer predicts, with revenues rising to $14.39 billion. This is a slight increase to eMarketer’s previous forecast for 2013 and beyond.
For Microsoft, however, the latest estimate of $660 million in US net search ad revenues earned last year and $890 million expected this year represents a dramatic downward revision from the previous predictions of $1.41 billion and $1.84 billion, respectively, based on a new assessment of Microsoft’s likely traffic acquisition costs (TAC).
Newly available data suggests, while Microsoft has decreased its TAC over time, their initial costs of acquiring search traffic were far higher than eMarketer previously estimated, triggering a downward revision to estimates of Microsoft ad revenues in recent years. eMarketer now estimates that Microsoft will account for 4.6% of total US search ad revenues in 2013, revised down from the 9.3% share we predicted it would take in March 2013, with the difference likely paid to the company’s ad partners.
Despite these revisions, up until last year Microsoft enjoyed the fastest growth rate among the six search ad publishers for which eMarketer forecasts revenues. This year, the top slot will go to Amazon, which will increase its net US search ad revenues by 46.8%, followed by Microsoft at 34.3%. IAC, which owns properties including About.com, OKCupid and Vimeo, will enjoy the third-fastest growth rate—as well as the third-largest net US search ad revenues—this year.
Yahoo!, which will grow its search ad revenues a bit more slowly than Google this year, still holds the second-largest share of the pie, expected to pull in $1.27 billion this year in net US search ad revenues, or 6.5% of the total. Overall, eMarketer estimates, US advertisers will spend nearly $19.49 billion on search this year, up a solid 12.4% over 2012.
eMarketer forms its estimates of digital ad spending, including search, as well as estimates of revenues at major digital ad-selling companies, based on the analysis of reported revenues from major digital ad-selling companies; estimates from other research firms; consumer internet usage trends; and eMarketer interviews with executives at ad agencies, brands, digital ad publishers and other industry leaders.
Corporate subscribers have access to all eMarketer analyst reports, articles, data and more. Join the over 750 companies already benefiting from eMarketer’s approach. Learn more.