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Yahoo! Languishes, While Google Keeps Pulling Ahead

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.

US online advertising revenues at google and Yahoo! as a percent of total online advertising spending

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.

US online advertising revenue growth at google and Yahoo!

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."

US online advertising revenues at google and yahoo!

To arrange an interview with David Hallerman for more insight on these trends, contact Kris Oser or Jared Jenks below.

About eMarketer
eMarketer is "The First Place to Look" for market research information related to the Internet, e-business, online marketing and emerging technologies. eMarketer aggregates and analyzes e-business research from over 2,800 sources, and brings it together in analyst reports, daily research articles and the "eStat Database" – the most comprehensive database of e-business and online marketing statistics in the world.

Media Contact
Kris Oser
Director of strategic communications, eMarketer
212-763-6033

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