Google Likely to Expand Lead in Search Ad Market

Everyone is saying it: U.S. Search spend significantly increased in Q4 of 2010. Kenshoo, SearchIgnite and Efficient Frontier have all released reports recently which corroborate the story. Meanwhile, Google is releasing it’s fourth quarter earnings today, and according to IHS Screen digest, they are likely to have increased their revenue generated from the global search advertising market by as much as 20% – despite having stronger competitors than ever before.

The table below is a preliminary estimate of Google’s search ad market share in 2010 from IHS Screen Digest.

“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 outperformance 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.”

Létang observes that Google’s market-beating revenue growth stands on three sturdy pillars: search, video/display and mobile.

Google Vs Competitors: Search
SearchIgnite reported that “Google continues to gain on YaBing, capturing 82.6% of Q4 advertising spend, while YaBing fell to 17.4% share.”

Statements from Efficient Frontier agree “Google continues to benefit from the Bing-Yahoo! integration with gains of 4.6% market share in spend YoY and 8% click share YoY. The Google gains come at the direct expense of Bing-Yahoo!. Yet, the Bing-Yahoo! transition went smoothly and the combined platform did not lose market share by spend between Q3 and Q4.”

Google Vs Competitors: Display
Efficient Frontier reported that “The demand for display advertising was reinvigorated throughout 2010 with Google AdEx responsible for the majority of exchange-based display media spend. In Q4, Google AdEx represented about 70% of advertisers’ display media spend outlay.”

IHS Screen Digest concurred, saying “display revenue increased by an estimated 61 percent during 2010, playing a major role in Google’s market share performance. This area was boosted by the success of Google’s subsidiaries YouTube and DoubleClick.”

Google Vs Competitors: Mobile/Social
The only real threats to Google seem to be from non-search companies such as Facebook who are making significant in-roads into the display market and also bolstering competitor search engines like Bing.

Google is also not market leader in Russia, where Yandex have just announced 43% revenue growth and in China, where Google have only just seen an increase in the Chinese search market share.