Google will report its Q2 earnings this afternoon, and available data suggests that continued revenue gains are in store. After 21% growth for US net advertising revenues in Q1, eMarketer anticipates a 17% gain in Q2.

Those sustained revenue gains reflect Google’s reliance on paid search advertising as the company’s main engine for growth. And a healthy search ad spending market further reflects the slowly recovering ecommerce market, said eMarketer senior analyst David Hallerman.

“Google is an indicator of economic trends. Most paid search ads have some commercial intent. Therefore, people clicking on search ads—and thereby monetizing them—indicates a continued increase in search queries with commercial intent,” Hallerman explained.

Furthermore, he noted, Google’s revenue growth also comes from the company’s success at placing the right ad in front of the right individual, and an increased competition for prime keywords, which tends to raise the price for higher positions in search results.

With all that in mind, eMarketer estimates that Google’s net US ad revenues for all of 2010 will grow by nearly 21%—making Google a rare bird among web companies that depend on ad revenues.

The phenomenon of multitasking while online is well-documented. According to the USC Annenberg School Center for the Digital Future, more than 80% of US internet users multitasked during at least some of the time they spent online in 2009, and the number multitasking most of the time had risen slowly but steadily since 2007.

We’ve also reported on TV-web multitasking, an activity where men lead the way, and the fact that kids have effectively increased the length of their day by 3 hours through multitasking with various media.

Morpace’s “Omnibus Report” outlines how that multitasking plays out in the social networking space. With web users around the world spending about a third of their online time on Facebook, how do they manage to conduct their other internet activities?

According to the report, social networks typically do not take up a user’s full attention, at least not for the whole time they are visiting the sites. More than two-thirds of web users check email while they are on Facebook, for example.

About a quarter of web users said they shopped or researched products online while they were also using Facebook, but they showed an even greater propensity to search. It’s likely that users are spurred to look for more information about something their social network friends have mentioned and search engines are the first stop.

Some of those searches are probably brand- or product-related, even if users might not categorize the activity as “shopping” until they are further down the purchase funnel. Social network multitasking should also be a boon to marketers who are hoping to connect with users on sites like Facebook but ultimately drive them elsewhere, for example to ecommerce sites to make a purchase or to a sign-up page to join an email list.

A big day: Experian Hitwise announced that social networks attracted more UK online traffic than search engines in May 2010. Since May of last year, social network visits have climbed from about 10% of all UK site visits to 11.88% of the total. During the same time, traffic to search engines fell from about 12% to 11.33% of all visits.

Google UK remained the most popular site overall among UK Web users, representing more than 90% of searches in May, said Hitwise. But Facebook ranked second in popularity, and accounted for 55% of all UK traffic to social network sites. YouTube claimed 16.5% of social network traffic, and Twitter placed third, with just over 2%.

These Hitwise results bear out some of the first rankings from the recently launched UK Online Measurement company (UKOM), which bases its audience estimates on Nielsen panel data. UKOM found that Google was indeed the top Web brand in April 2010, attracting 35.3 million unique visitors. The combined audience of Microsoft’s MSN, Windows Live and Bing search engine registered 28.3 million users, ahead of Facebook with 25 million.

These audience figures go some way to explaining why Facebook is also being widely credited with saving the display ad industry virtually single-handed. According to comScore’s Ad Metrix, the leading social network delivered almost 21 million display impressions to UK Web users in March 2010. That was more than 30% of all display ads served that month, comScore reported.

The key indicator in Yahoo!’s Q1 earnings call yesterday is not that the company’s profit rose from 8 cents to 22 cents per share, a 175% leap in earnings. While that news is certainly critical for the stock market, it’s far less so for the US online ad market.

When you dig into the numbers, several crucial elements say that Yahoo!’s results signify slow, but significant growth for US Internet advertising.

• Net US ad revenues of over $750 million represented a drop of only 4.5%, year-over-year. When you consider that all four quarters in 2009 delivered double-digit losses, this is a key improvement.
• Display advertising, which contributed 41.5% to Yahoo!’s total Q1 net US revenues, was up by 11.7%. That gain is due to continued expansion of brand advertising on the Web, which often looks for the scale and reach that the Yahoo! portal still provides.
• Paid search advertising, however—which made up 32.1% of the company’s net US ad revenues—fell by 19.8%. However, the light at the end of this dark tunnel was shed by the initial gains from the search deal with Microsoft, which netted Yahoo! $78 million worldwide in Q1.
• The Yahoo! ad network also showed a sharp turnaround, with its US net revenues up by 4.9% in Q1, compared with a 4.2% loss in the previous quarter. The spending increase from affiliate sites is one sign of an influx of ads beyond the Yahoo! portal, across the larger Web.

Overall, Yahoo!’s US net revenues in Q1 show the portal on track for eMarketer’s projection of minus 2.9% growth in 2010.

However, especially if more brand marketers look to further expand their reach online—to support their social media marketing efforts, for example—it’s still possible that Yahoo! could show positive revenue gains this year.

Google reported its Q1 2010 earnings yesterday, and from the online ad market—not the stock market—point of view, Google’s results are an early signal of resumed health for US Internet advertising.

Here are some bottom line numbers for the search giant during the year’s first quarter:

• A record of nearly $2.25 billion in US net ad revenues. While that figure was pretty much flat relative to the previous quarter, Q1 typically underperforms Q4.
• US net ad revenues—meaning revenues after traffic acquisition costs were paid to partner sites—were up 21% over last year’s Q1.
• Google’s net US AdSense revenues leapt by 59%. While that growth came from only a tad more than $153 million in net proceeds, it points to increasing usage of the Google network for display advertising.

The robust ad spending growth shown by all those numbers reflects paid search’s place as a leading indicator for the overall US economy. Most search ads come up as a result of commercially focused queries. A 21% jump in Google’s total net US ad revenues, therefore, is likely due to consumers entering more search queries that have some shopping intent, and subsequently clicking on more ads.

Between the economic recovery and Google’s unsurpassed ability to deliver relevant search ads, the company’s place in the US online ad market continues to get larger. While 35.3% of total online ad spending in 2009 came through Google, that figure will rise to 36.2% this year and 37.4% next year, according to eMarketer’s estimates.

However, it would be unwise to take Google’s solid results as an absolute gauge for the entire US online market. As we’ve learned, the company’s capacity to make money from digital advertising is exceptional. And as the chart shows, while Google’s share of the whole US online market will rise, the shares among the three competing portals—Yahoo!, Microsoft and AOL—will fall.