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Yahoo In Context: It’s Declining While The Online Ad Market Keeps Growing

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Yahoo’s CEO Scott Thompson earlier today gave frank — and, the hopeful might say, encouraging — run down of the task ahead to turn around Yahoo (NSDQ: YHOO), an internet portal that was once on top of its game but has lately seem some serious decline. Some numbers provided today by eMarketer spell out the challenge in a different way.

eMarketer notes the overall U.S. online advertising market grew was worth $9.2 billion in Q4 2011. That’s growth 23.5 percent on the same quarter a year ago. The full-year growth rate was comparable: up 23 percent in 2011 to $32 billion from $26.04 billion in 2010.

However, Yahoo’s share of that is going in the other direction: as the market grew last year, Yahoo declined. It now has an 11 percent share of the market, compared to 13.3 percent in 2010.

Meanwhile, Google’s share of the online ad market is continuing to rise: it stood at 40.8 percent in 2011, compared to 38.5 percent in 2010. New entrants like Facebook are also nibbling into the pie: Facebook’s share was 6.4 percent in 2011, up from 4.6 percent in 2010. Overall, Google (NSDQ: GOOG) reported $36.53 billion in ad revenues for 2011, compared to $4.01 billion for Yahoo.

A lot of that strength for Google comes from search: Google now takes 75.9 percent of all search ad sales, dwarfing Yahoo’s 7.9 percent share (down from 10.7 percent a year ago). In financial terms that worked out to revenues of $1.85 billion for 2011, nearly halved from 2010’s revenues of $3.16 billion.

Meanwhile, display is a particularly tough spot for Yahoo. This had traditionally been where it claimed superiority over Google and others, but that’s not the case at all anymore: Last week, Google said it was on track to make $5 billion annually from display ads, more than twice the amount of sales that Yahoo reported for display in 2011: $2.16 billion.

Here’s what that means in terms of U.S. online display market share, according to eMarketer: Yahoo’s display share is now 13.1 percent in 2011, down from 14.4 percent in 2010. eMarketer estimates that Facebook is bigger, taking a 16.3 percent share in 2011 compared to 12.2 percent in 2010. In 2011, Google’s share of overall US display advertising revenues grew to 9.3 percent in 2011 from 8.6 percent in 2010, but if you consider Google’s forecast of $5 billion, it, too, will surpass Yahoo unless Thompson really manages to turn things around.