Top Internet Portals to Weather Economic Storm

August 21, 2008

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Paid Search

Google’s strong financial results for 2Q08 – including 27% growth in net US advertising revenues – is an indication that Google, Yahoo and MSN would continue to show positive results for all of 2008, despite economic turmoil in the US, eMarketer forecasts.

In 2008, the top four portals are projected to record 16.2% net growth (i.e., after traffic-acquisition costs) in online advertising – together accounting for more than $14 billion for the year.

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Google’s online ad revenue is projected to grow 27.4% in 2008, surpassing $7.6 billion – as well as the combined net online ad revenues of its three closest competitors.

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“Even as Google’s main expansion continues to shift outside the States, with net international advertising revenues expected to rise by 51.2% in 2008, the US growth rate is far from a downturn,” noted eMarketer senior analyst David Hallerman. “The continued power of paid search advertising is key here.”

“At the same time, even as Google’s main competitors – Yahoo, MSN and AOL – take in smaller shares of the entire US Internet ad market, their overall importance means that 25.7% of all US online ad dollars will flow through those three portals, in contrast to 30.7% for Google alone,” Hallerman added.

Growth at Yahoo is expected to be at 8.2% in 2008, down from nearly 12% in 2007.
Meanwhile, even as MSN’s net revenue growth in the US reached 22.6% in 2007, it is expected to drop to 14.3% with net profits down due to its costs for getting that revenue.

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