It’s no secret that Facebook has become a major player in the online ad market. Net US ad revenues on the social network now surpass those of Microsoft or AOL, thanks largely to massive display revenues. But in the overall online ad market, Google and Yahoo! remain the front-runners.
eMarketer estimates that net US ad revenues will be up 23.5% at Google this year to nearly $12.4 billion. Second-place Yahoo!’s $3.4 billion in revenues will represent a year-over-year decline of 2.1%. The highest growth will be at Facebook, where revenues will be up 80.9% in 2011 after 164.1% growth in 2009 and a 117.8% increase last year.
Rises in spending at Facebook, Google and Microsoft will far outweigh declines at Yahoo! and AOL and spell a 20.5% overall increase in net ad revenues at the top 5 sites, to $20.3 billion. That growth is nearly double that of the overall internet ad market (10.5%).
“The sharper ad spending growth at only a handful of ad selling companies represents the further consolidation of the online market,” said David Hallerman, principal analyst at eMarketer. “Consolidation is especially true for search advertising, but also shows up in the far more diverse display ad business.”
eMarketer bases its estimates on a deep analysis of the companies’ reported revenues, plus overall trends in the specific elements—most notably search and display advertising. For Facebook, which does not report revenues, the revenue projections are based on a meta-analysis of survey data and visitor statistics from over a dozen sources and were initially released in January.
Google’s solid revenue growth, supported by a rise in display ad revenues along with its core search business, will mean an ever-increasing slice of the online ad spending pie going to the search giant. Its market share will rise from 38.9% in 2010 to 43.5% this year and again to 47.6% by 2012. Yahoo! and AOL will experience a steady but slowing decline in market share over the same period.
Facebook, by contrast, will more than triple its 2009 share of total online ad revenues by this year, when 7.7% of all US online ad spending will go to the social network. Microsoft is also seeing its share of the online ad market slowly rise.
“It’s not hard to see the online ad market turning into a duopoly,” said Hallerman, “with Google and Facebook becoming the two prime choices for ad spending—separate but near equals.”