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

January 31, 2008

This article is included in these additional categories:

Brand Metrics | Paid Search | Retail & E-Commerce

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.

emarketer-us-online-ad-spend-by-format-2006-2011.jpg

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.

emarketer-us-search-ad-spend-growth-2001-2011.jpg

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.

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