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Paid Search Dominated Online Advertising in '07, Google Dominated Paid Search

Google dominated paid search advertising in 2007, raking in 75% of US ad spend in the market, up a whopping 15 percentage points from 60% in 2006, according to a new eMarketer report, “Search Engine Marketing: User and Spending Trends.”

No. 2 Yahoo collected just 9% of search ad expenditures, with other search engines splitting the remaining 16% among themselves, said David Hallerman, senior analyst and author of the report. (Also see Efficient Frontier’s take on the US paid search market.)

Advertisers spent over $8.6 billion on search in 2007, so even that 16% slice is nothing to scoff at, totaling nearly $1.4 billion. Moreover, search ad spending is expected to nearly double from 2007 to 2011, reaching almost $16.6 billion.

Yahoo, meanwhile, wields considerable influence in display advertising, which is the second-largest online ad format: In 2007, display ads brought in nearly $5 billion.

By 2011, eMarketer predicts, display spending will reach over $8 billion.

Paid search reached a 40% share of total US Internet ad spending in 2004. “Since then, and going forward, online advertisers have and will put about the same percentage into search,” Hallerman said.

As great as search spending is, as might be expected its growth is leveling off. After a 27.5% increase in 2008, annual growth will is projected to decrease to 17.6% in 2009 and 15.2% in 2010.

By early next decade, growth is forecast to be around 10%, according to eMarketer.