Google search advertising revenue grows 20.2% in 2010

Thursday 20 January 2011 | 07:26 CET | News

Google has expanded its leadership in the worldwide search advertising market in 2010, according to a study by IHS Screen Digest. Google’s full-year search advertising revenue in 2010 amounted to USD 25.4 billion, up 20.2 percent from USD 21.1 billion in 2009. This gave the company a market share of 83 percent in 2010, up from 81 percent in 2009. Google’s revenue growth was even stronger in display and mobile advertising. As a result, Google’s total revenues are expected to reach USD 28.9 billion in 2010, up 22.5 percent 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. 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. The global search advertising market amounted to USD 30.4 billion in 2010, up 17 percent from USD 26.1 billion in 2009. This represents a strong acceleration after the slowdown of 2009, caused by the global advertising recession, when search growth declined by 11 percent in Europe and by 1.5 percent in the more mature US market. 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. On the mobile ad side, Google benefitted from revenue generated by the increasing popularity of the Android operating system and the company’s acquisition of AdMob.

One major challenge was the launch of Microsoft’s heavily promoted Bing and the search engine’s alliance with Yahoo. However, Google so far has lost little or no ground, as Bing is mostly growing at the expense of Yahoo Search. But while Google remains the undisputed leader in most major markets, there are some notable exceptions. These include South Korea, Russia and, most importantly, China. In these markets, the dominant search engines belong to local operators, that is, NHN, Yandex and Baidu. Owing to its dispute with the Chinese government in the first half of the year, Google has lost significant market share to Baidu in 2010, but finally decided to stay in the local search market that is already worth USD 1.6 billion and growing at 60 percent in 2010. The association of Microsoft with Facebook and its 500 million-plus users is a much bigger threat to Google’s dominance of the internet than the Yahoo-Microsoft deal or the company’s legal issues. 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. The main concern, from a Google perspective, is that by providing similar scalability and accountability along with more focused targeting, social marketing may become a viable alternative to both search engine marketing and display.

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