Despite rapid gains by Microsoft’s Bing, Google’s share of the $13.59 billion US search advertising market will continue to grow in 2011, according to data released today by eMarketer. The company’s share of overall US online search revenues increased to 71.4% last year, as Google’s search revenues reached $8.83 billion in the US.

Search advertising revenues at Microsoft grew 47.4% to $1.26 billion in 2010, eMarketer estimates. This year, growth rates for the company won’t be quite as high, though eMarketer does expect Microsoft’s US search ad revenues to expand by 16.4% to $1.47 billion by the end of the year — which will push its share of overall search revenues to 10.8%.

“The US paid search market is more and more a two-company game,” said eMarketer principal analyst David Hallerman. “And yet there’s no real competition. Even though Bing is gaining revenue, Google’s share is still rising as the combined revenues at Microsoft and Yahoo! continue to fall.”

eMarketer expects Yahoo!’s share of the US search ad market to decline to 8.1% in 2011, with search revenues reaching $1.1 billion—down 14% from $1.28 billion in 2010.

AOL is expected to earn just $252 million in search revenues in 2011, down 11.5% from $285 million in 2010, according to eMarketer. The company’s share of the overall market revenues is expected to drop to 1.5% this year, compared to 2.3% in 2010.

You can read the full release on search advertising revenues at Google, Yahoo, Microsoft and AOL here.

With all the discussion about Facebook’s worth and potential in the face of Goldman Sachs’ $450 million investment, a lot of data has been tossed about regarding Facebook’s size and growth—particularly in relation to Google.

Last month, before the deal was announced, Hitwise released its annual list of most-searched terms. Facebook made the top of the list for the second year in a row. This data led many media outlets to claim that Facebook has finally beaten Google and taken over the internet. But is search term data really that meaningful in determining who is winning the internet war?

Four different terms for Facebook were in Hitwise’s Top 10 search terms, including “Facebook login” and ”www.facebook.com.” These accounted for 3.48% of all searches in the US among the top 50 terms. Facebook.com also topped Google.com as the most-visited website of the year, and first did so back in March 2010, according to Hitwise.

Some critics of the data said that it was inaccurate because anyone already on Google.com, wouldn’t search for “Google.” Other criticisms include the fact that Googling Facebook just proves that users are not invested in the site enough to bookmark it or remember the URL.

Data for unique visitors and page views provides a more accurate picture of the popularity of a website. And, when looking at the information, Google’s entire portfolio, including YouTube, should be taken into account.

Ad revenues and monetization plans are also determining factors in the success of a site. In August, eMarketer estimated Facebook ad revenue would be $1.3 billion in 2010, below Yahoo and Google. (Our next social network ad spending report—with an updated Facebook forecast—will be out soon and Facebook will not have higher revenues than either portal.)

Hitwise reported that the combined Google properties accounted for 9.85% of all US website visits, while Facebook’s properties accounted for 8.93%. The just-released J.P. Morgan “Nothing But Net” investment guide estimated, based on comScore data, that 70% of US internet users are also Facebook users, compared to 81% who are Google users and 84% who are Yahoo users. And Google sites were still above Facebook in terms of unique visitors in November, comScore reported.

Earlier this week, eMarketer senior analyst Debra Aho Williamson wrote about the benefit for marketers in the recent $500 million investment by Goldman Sachs and Russian firm Digital Sky Technologies in Facebook. Facebook uses its social graph to more effectively target advertisements, and the funding will help improve that targeting and expand it across the web.

“Where Facebook and Google are meeting head to head is in going after advertisers that typically buy search ads,” Williamson told me. “Performance-based advertising is where Facebook is putting major emphasis this year. Secondarily, I predict Facebook will go strongly after the local-ad market. Once it gets Deals up and running it’s got a pretty powerful promotional mechanism for local businesses.”

The bottom line: While Facebook is the dominant site for social networking, with the right innovation, it can use the new investment to expand its footprint online and increase competition with Google and other companies. Google, for its part, is also working to improve its search and trying to succeed in the social realm as well. In the immediate future, these two sites will continue to battle for users and ad dollars, but they will share the internet throne.

With the Federal Trade Commission proposal for an online do-not-track mechanism and members of Congress putting out their own PR on the issue, I asked eMarketer’s principal analyst and social media expert Debra Aho Williamson for her take on the issue.

Question: What do you think of the proposal for a do-not-track list, which the FTC and lawmakers seem to think would work pretty much like the telemarketing do-not-call list?

Debra Aho Williamson: The reason do not call works is because everything is associated to a phone number but on the internet there are so many ad servers, networks and parties involved in delivering internet advertising, that it would be impossible to have a single do-not-track list.

Question: Consumers don’t like the idea of being followed online, so isn’t the demand for some kind of do-not-track mechanism a reaction to the genuine feeling among consumers that their privacy is being violated?

Debra: Any do-not-track mechanism would pretty much obliterate the way consumers use the internet. Consumers don’t realize how much of the basic functioning of the internet and the positive user experience revolve around tracking.

They don’t realize how do not track would negatively impact their experience. Things they don’t think about are how when they visit a news site the site tracks what they are interested in and then offers them stories they like. Or how an ecommerce site keeps their credit card information, so they don’t have to re-enter it every time they want to buy something. Or that a social site keeps track of their preferences.

People take all of this for granted, and I’m not sure that consumers or the FTC are completely aware of this.

Question: What about offering consumers an opt-in for being tracked?

Debra: Opt in always sounds great. But when it comes to advertising, there are so many parties and players involved, it is really hard to make opt in effective. When you think about all those different ads on a page, how could you opt in to all those suppliers?

It’s easy to opt in with email, you just say you would like a particular email newsletter. But with targeting it’s much more complicated. For instance, I was on a news site and there were ads on the page. I saw an ad for Seattle, which just happens to be where I live. There was also a banner ad for American Girl dolls. Oddly enough, I had been looking at American Girl dolls while holiday shopping for my kids. Is that creepy or helpful? I find it helpful.

Question: What about self-regulation?

Debra: It’s pretty clear that the landscape of targeted content and targeted advertising is getting very complicated. There are many companies using data on consumers in some way to deliver a customized experience, whether in advertising, customized content or in social media. But the number of players involved is enormous, and getting agreement across the industry is going to be impossible.

That said, any time that the government raises the specter of regulation, the industry always says it can regulate itself. I wouldn’t be surprised if we see a lot more proposals about self-regulation as well as the industry spending more time lobbying lawmakers.

Question: How should advertisers deal with this pressure?

Debra: The best thing advertisers can do is remember to take the highroad. The consumers are their lifeblood and especially when it comes to social media, where consumers have so many opportunities to express themselves, the minute an advertiser oversteps their bounds, the consumer is going to talk about it all across the internet. That would be the worst-case scenario.

Recent weeks have brought a raft of estimates and forecasts for UK advertising spending in 2010 and 2011. For digital media, the news is excellent; for traditional channels, more sobering.

Spending on internet ads grew 10% in the first half of 2010, the UK’s Internet Advertising Bureau (IAB) declared in October. As reported by MediaTel, online spending came to almost £1.97 billion ($3.09 billion), or 24.3% of all UK advertising during the period.

According to the IAB, online display returned to healthy growth in H1 2010, with spending of £381 million ($598 million)—a rise of 6.4% compared to the first half of 2009. Banner ads accounted for 72% of the display market, or £272 million ($427 million), while pre- and post-roll video ads shot up to £20.7 million ($32.5 million), and display placements on social media sites contributed around £41 million ($64 million).

Display ad impressions (excluding video) rose even more steeply than spending between Q3 2009 and one year later, to judge by figures from comScore Ad Metrix. This suggests that advertisers were getting much better value for their display budgets in 2010, which doubtless encouraged more committed spending.

Classified ads also staged a comeback in 2010, the IAB reported, climbing 11.4% to £379 million ($595 million) during the first half of the year. Paid search marketing rose by 8.9%, to claim 59.9% of all online ad spending, or just over £1,180 million ($1,853 million).

The IAB saw the double-digit rise in online ad spending as part of a more general recovery; by its calculations, total UK ad spending reached £8.1 million ($12.7 million) in H1 2010, 6.3% higher than spending in the first half of 2009.

The Bellwether report, issued by the Institute of Practitioners in Advertising (IPA) and accountancy firm BDO LLP, was less upbeat, noting that the ad budgets of UK marketers rose by an average 0.5% in Q3 2010—a marginal gain, though a welcome contrast to the 4.6% fall registered in Q2.

Like the IAB, the IPA found that the internet delivered the outstanding success stories, with spending on search up 9.9% in Q3 2010, and display spending up 13.3% compared with the previous quarter.

The IPA did point out that most of the 300 or so firms polled for the report were less optimistic about the financial prospects for their industries than in Q2. Moreover, the report’s author ventured that the strong economic performance in Q2 “likely marked the peak of the recovery cycle.”

Looking ahead to 2011, the latest Consensus Forecast from the World Advertising Research Centre (WARC) projected that worldwide ad spending will rise by 4.5%, following a gain of 4.4% in 2010.

Most of that growth will be driven by emerging markets, such as Brazil (where ad spending is predicted to leap 11.4% in 2011), China (13%), India (14%) and Russia (16.3%)

The UK and most other major European countries can expect minor gains by comparison. UK ad spending will rise 2.7% in 2011, said WARC, or just over half the 5% growth anticipated for 2010.

France and Germany will see 2% growth in total ad spending, while Spain will register a gain of 2.2%, after a decline of roughly 1% in 2010.

Globally, WARC foresaw average 2011 increases in Internet ad revenues (13%) far outpacing growth rates in traditional media (5.2% in TV, for example).

The UK, long a leader in internet advertising, will show the lowest growth rates, according to WARC. But even then, online ad spending will be an estimated 6.2% higher in 2011 than in 2010.

Most recently, key companies in the WPP Group, including agencies Ogilvy & Mather and Mindshare, raised their overall forecasts for revenue growth in 2011. According to CEO Sir Martin Sorrell, the revisions were based in part on WPP’s own 4.5% growth between January and October 2010. Group companies had earlier suggested that they anticipated expansion of between 3% and 4% in 2011.

Where does this leave UK ad spending, and online ad spending in particular? Some key aspects to keep in mind:

1. The economic situation remains volatile. In the past week alone, the UK has been buffeted first by news of another national financial bail-out in Ireland (the UK’s number one trading partner) and then by claims that the economy grew by 0.8% in the third quarter, and that spending cuts by the Conservative/ Liberal Democrat coalition government will not have as drastic an effect on public sector jobs as previously feared. The arrival of good and bad economic news in quick succession has been a hallmark of 2010, and looks set to continue as 2011 approaches. This uncertainty will weigh on advertisers, but most have little choice but to maintain spending at or above current levels. After the declines of 2009, further trimming might affect their market shares.

2. For the moment, the consumer mood is largely positive, buoyed by the prospect of Christmas. Many high street retailers—and several online players, including Amazon—are already offering mark-downs, and sales are healthy in many sectors. In the week ending November 13, the John Lewis group recorded sales of £76.93 million ($120.78 million), up 11.5% on the previous week, and 6.8% higher than the corresponding week of 2009. January may bring a less happy mood, however, as the holiday spirit recedes, some jobs are in jeopardy and value-added tax on most purchases goes up to 20%.

3. While growth in total ad spending may languish in the low single digits, there is little doubt that digital will again outpace traditional media, as in 2009 and 2010. Industry observers are unanimous in predicting that display (driven by sharply higher spending on video ads and social media placements) will gain further momentum, while paid search also thrives and mobile marketing moves up a gear.

France and Spain saw robust growth in online ad spending during the first half of 2010, according to PricewaterhouseCoopers (PwC) and national Internet Advertising Bureau (IAB) organizations in the two countries.

In Spain, online spending reached an estimated €377.4 million ($525.7 million) in H1 2010. This was 20.3% higher than online ad spending in the first six months of 2009, and represented 13% of ad spending in all media. The IAB/PwC figure is almost exactly half the full-year estimate for 2010 produced by eMarketer, suggesting that our view of the market’s potential this year will be borne out.

In France, digital channels are expected to claim 16% of all ad spending in 2010, but that will rise to 21% of total spending in 2014, IAB and PwC predicted. Online ad spending in the first half of 2010 passed €1 billion ($1.4 billion), according to several sources.

Display is enjoying a new lease of life in both France and Spain, according to IAB and PwC.

In Spain, for example, search commanded 52% of online spending in H1 2010, and total outlay on search rose 13.8% compared with H1 2009. But display was found to be growing more rapidly than search, for the first time ever, with spending up more than 28% year-on-year.

Cash-strapped Spanish advertisers typically opted for less expensive display options in early 2010. Embedded formats, including banners and skyscrapers, accounted for 51.3% of online display spending, while just 5.6% of expenditure went to expanding and floating formats.

Video advertising is crucial to rising display budgets throughout Europe, though spending levels and growth rates vary from one country to another. IAB and PwC forecast that rich media and video ads will double their share of French online revenues by 2014. In Spain, spending on video ads was up 100% in a single year. But the video ad market is inevitably much smaller than its counterpart in France, and constituted just 2.7% of online display ad spending in Spain during H1 2010.

New formats such as video encourage new measures of viewer engagement; these, in turn, are prompting marketers to rethink ad payment models. This revision is long overdue, according to PwC analysts. They found that 62.3% of display campaigns in Spain were booked on a CPM basis, while 15.3% used cost-per-acquisition or cost-per-action. Just under 13% ran for a fixed period of time and 7.3% were paid for cost-per-click. These approaches no longer reflect the reality of consumer interaction with digital media, said PwC.

For more information on recent trends in European online ad spending, read the eMarketer report, Western Europe Online Ad Spending: Leading the Recovery (October 2010).