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Google to Become US Display Ad Leader

Strong growth for Facebook and Google expected as others see shares shrink

NEW YORK, NY (September 20, 2012)—Google will earn more US display advertising revenues than any other company this year, topping the market with 15.4% share, according to new estimates by eMarketer.

The milestone means Google now holds more share than any other company in each of the US search, display and mobile advertising markets.

Google is expected to take home $2.31 billion in US display ad revenues this year, up 38.5% from $1.67 billion in 2011, eMarketer estimates. Facebook, by comparison, will earn $2.16 billion in US display ad revenues this year, up 24.4% from $1.73 billion last year. Yahoo!—the longtime leader before Facebook topped it last year—will see its share fall further.

This year, the overall US display ad market will grow 21.5% to $14.98 billion from $12.33 billion in 2011, eMarketer estimates, driven by the expansion of both Google and Facebook as advertising platforms; the continued health of banner spending due to expansion of inventory, aided by mobile growth; and increased spending on digital video advertising, especially YouTube.

Behind the Numbers

The overall forecast for display has been slightly reduced from the previous forecast to reflect the mix of lower prices for display advertising on ad networks combined with the reluctance of some major brands to make extra-large investments in digital display advertising. Display figures released by the IAB/PwC for the full-year 2011 also came in slightly lower than expected.

There are several factors underpinning Google’s ascent to market leader, including the continued strength of its ad network, video advertising on YouTube and mobile display advertising on AdMob.

However, the company’s newfound lead also comes as Facebook ad revenues have fallen short of expectations set in February, when eMarketer predicted US display revenues at Google would trail Facebook just slightly this year. eMarketer cut its ad forecast for Facebook earlier this month.

Still, it’s important to keep in mind that display growth at both companies is strong—and far stronger than other major display sellers. Combined, Google and Facebook will represent just below 30% of total display ad revenues by the end of 2012. This is expected to climb to 37% in 2014 as the two companies shut smaller platforms out of the market—despite a fragmented display marketplace, especially among mobile ad publishers and networks.

Yahoo! will account for 9.3% of total display ad revenues this year, while Microsoft and AOL will each make up less than 5% of the total, eMarketer estimates. These three companies will decrease in share as Google and Facebook expand.

eMarketer bases its estimates for US display advertising spending and market share on an analysis of reported revenues from company releases; estimates from other research firms on advertising revenues, pricing, impressions and other factors; usage trends at major ad publishers; eMarketer interviews with executives at ad agencies, brands, online ad publishers and other industry leaders; and figures from the Interactive Advertising Bureau and PricewaterhouseCoopers, its benchmark source for overall digital advertising revenues, for which the last full year measured is 2011.

These figures represent net US display ad revenues after traffic acquisition costs to partner sites and publishers have been factored out, and include advertising that appears on desktop and laptop computers as well as mobile phones and tablets.

Display Formats

This year, display ad spending growth will outpace that of paid search ad spending, driven by digital video advertising and sponsorships. At a 46.5% growth rate, digital video ad spending will continue to post the strongest gains—though it is starting from a much smaller base. Online and mobile video viewing are becoming increasingly popular. According to eMarketer forecasts, more than half of the US population will view video content through desktop or mobile devices in 2012.

The growth of rich media ad spending has also surpassed eMarketer’s earlier predictions and has been increased to 10.1% from 4.1%. Many marketers view rich media as more fitting for mobile platforms than on desktop and more effective than banner or video advertising on mobile devices.

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Clark Fredricksen
Vice President, Communications, eMarketer
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Posted on September 20, 2012.