Trends expected to persist as companies report earnings this week
NEW YORK, NY (July 17, 2007)–In anticipation of second-quarter 2007 earnings calls from Google and Yahoo! this week, eMarketer has released new online ad spending estimates for the two companies relative to the overall US market.
Of the $21.7 billion US advertisers will spend online in 2007, eMarketer now expects Google to account for 27.4% of that total — or $5.9 billion in net US revenues. But while Google has ascended, Yahoo!'s stake is slipping to 16.3%, down from a 19.4% market share in 2005.
Although net US revenue growth rates at both Google and Yahoo! have declined since 2004, eMarketer projects Google's ad revenues to rise by 45% in 2007. Yahoo!, on the other hand, has struggled to keep up, with growth falling to 18%, even as the total US Internet advertising market expands almost 29% this year.
The loss in traction at Yahoo! has come from competition in paid search and the delay of its Panama search platform, while display revenues have remained solid. However, with up-and-coming players MySpace and Facebook becoming strong competitors in their own right, Yahoo!'s challenges are mounting.
"At this point, the key question for Yahoo! is whether to chase the evermore elusive paid search advertising dollar or to shift its focus even further onto video and display ads for brand marketers," said David Hallerman, senior analyst at eMarketer. "At the same time, Google's spectacular revenue growth remains unbalanced by its reliance on text-link ads. Getting greater acceptance among its advertisers for video and display ads on its network will be one of Google's greatest challenges this year."
To arrange an interview with David Hallerman for more insight on these trends, contact Kris Oser or Jared Jenks below.
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Director of strategic communications, eMarketer