Google extends search advertising dominance

Online advertising giant Google expanded its leadership in the worldwide search advertising market during 2010, according to new research from IHS Screen Digest. If it wasn't for the likes of Facebook, the firm would have the Internet stitched up completely.

With the firm preparing to release its fiscal 2010 earnings on January 20, it is estimated that Google’s full-year search advertising revenue in 2010 will amount to some $25.4 billion, up 20.2 per cent from $21.1 billion in 2009.

This would give the company a market share of 83 per cent for the year, up from 81 per cent in 2009. And with an even greater extension into display and mobile advertising, IHS click counters expect Google’s total revenues to reach $28.9 billion in 2010, up 22.5 per cent from 2009.

"With the arrival of Microsoft’s Bing and rising competitive obstacles in fast-growing regions including China, Russia and South Korea, 2010 seemed like it might be the year that Google would surrender some of its dominance in the global search advertising market,” said Vincent Létang, senior analyst and head of advertising research for IHS. "However, even amid these challenges, Google managed to outgrow the overall market. What makes Google’s out-performance even more impressive is that it came during a year when the overall market revenue rose at an impressive double-digit percentage following a slowdown in 2009."

The anaysts estimate that the global search advertising market amounted to $30.4 billion in 2010, up 17 per cent from $26.1 billion in 2009. The market had declined by 11 per cent in Europe and by 1.5 per cent in the U.S. during 2009.

Search advertising is still Google’s cash cow, analysis suggests, while video and display have generated short-term revenue growth.

Display revenue increased by an estimated 61 per cent during 2010, boosted by the success of Google subsidiaries YouTube and DoubleClick.

The firm's success with its Android OS lines up the mobile ad market for a future killing.

The challenge posed by Microsoft's heavy promotion of Bing and its alliance with Yahoo, may have largely backfired as Bing is mostly growing at the expense of Yahoo Search, leaving Google unscathed.

China's resistance to Google is paying off though. Google has lost significant market share to loacl search engine Baidu in 2010,in a market that grew by an estimated 60 per cent during the year.

The only real challenge for Google may lie with the social networking sites, in the analysts' view.

"The association of Microsoft with Facebook and its 500 million-plus users is, in our view, a much bigger threat to Google’s dominance of the Internet than the Yahoo-Microsoft deal or the company’s legal issues," Létang said. "Social networking is the only major Internet trend where Google has failed to make its mark by either acquiring or developing strong products, despite semi-failed short-lived attempts."

Facebook’s global advertising revenues were estimated at between $1.2 billion for the first nine months of 2010, according to IHS Létang’s new report, entitled: Search Soars Again is here.