Tuesday, April 15, 2008

Is Google being dethroned?

Though Google can certainly claim the lion’s share of search ad dollars, the revenue gap that exists between the company and its chief competitor in the search industry, Yahoo, might be shrinking. According to a New York Times blogpost, “Study: Google Lost Share of Search Ad Dollars to Yahoo,” by Miguel Helft, the results of a study by SearchIgnite, a search advertising technology firm, prove that Google’s dominance in the search ad wars may be on the decline:

The report shows that spending by search advertisers on Yahoo grew a robust 57 percent while spending on Google grew only at about half that rate. That meant Google’s total share of search ad dollars declined slightly to 70.4 percent, while Yahoo’s rose to 24.2 percent. Microsoft’s declined slightly to 5.4 percent.

Though the divide that exists between the two company’s market shares is still immense, this slight reversal of fortunes is nevertheless big news, especially in light of recent events and upcoming earnings reports. Yahoo CEO Jerry Yang would like this upsurge to support his point that Microsoft has undervalued Yahoo in its bid for the company. In terms of Google, some investors are concerned that a flagging economy will slow the company’s growth. According to a comScore report, “paid clicks” were flat in January compared to years early. How will its loss of market share to Yahoo be interpreted by analysts?

Companies, who once only considered advertising on Google, may now be discovering that they have other options, especially if their “paid click” levels were as high as expected. Clearly it would be interesting to learn what sorts of companies have moved from Yahoo to Google and their reasons for abdication of the Internet giant. Though its unlikely that Google will lose its search ad throne any time soon, this news does shed a new light on its dominance over Internet advertising.

Link: http://bits.blogs.nytimes.com/2008/04/15/study-google-lost-share-of-search-ad-dollars-to-yahoo/index.html?ref=technology

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