Blog Post

Online Ad Spend Rises 28 Percent In Q4; Google’s Internet Ad Share Slipping: Report

Online ad spending in Q4 grew nearly 28 percent over the same period the year before, coming in $7.3 billion, said analyst firm IDC. For the full year 2007, online ad revenue gained 27 percent with $25.5 billion compared to 2006. While the research offers more proof that the days of 30 percent online ad growth are in the past, IDC’s research also showed that IDC research also found that Google’s (NSDQ: GOOG) dominance in the U.S. may be slipping.

The search giant’s market share declined fell for the first time in two years due to slower growth in Q4 sales. Google was down 0.5 percentage points to 23.7 percent compared to Q307. Google’s estimated net U.S. online ad sales – not counting the traffic acquisition costs they pay out to the partners in their networks – grew by a little more than 40 percent in Q4; last year at the same time, Google’s growth had been 50 percent.

And if Yahoo (NSDQ: YHOO) decides to take back its rejection of Microsoft’s (NSDQ: MSFT) merger offer, the combined entity would have a net U.S. ad market share of about 17 percent, IDC concluded, using its data from the last quarter. That leads IDC to suggest that Yahoo should seriously reconsider its rejection of Microsoft; “the combined entity would have a net U.S. advertising market share of about 17% based on our 4Q07 data,” says Karsten Weide, program director for IDC’s Digital Marketplace, Media and Entertainment service. While it wouldn’t be able to knock Google off its perch at the top, a YHOO-MSFT combo “would give them a much better fighting chance than if they went it alone.” Release