Google And Yahoo To Take 90% Of Paid Search

    April 20, 2007

U.S. Internet users did 75. 8 percent of their January 2007 searches on Google or Yahoo, according to comScore media, and Nielsen//NetRatings found the combined total to be 76.4 percent.

Google And Yahoo To Take 90% Of Paid Search
Google And Yahoo To Take 90% Of Paid Search

"In fact, over 90% of US paid search ad spending will go to the two search giants in 2007," says eMarketer Senior Analyst David Hallerman, author of the new Search Marketing: Counting Dollars and Clicks report.

"One side effect of this degree of concentration is that it can often make marketing on second-tier search engines often a better value for the money – less competition for keywords means that advertisers get broader reach for fewer ad dollars."

Paid search comprises the largest portion of the U.S. online advertising market and has since 2003.

"The point to note, however," says Mr. Hallerman, "Is that with its 42.5% contribution to the online total in 2007, according to eMarketer’s estimates, paid search’s spending share has remained fairly level at the 40%-plus plateau since early in the decade."

Paid search is the main force behind U.S. online advertising, and spending on paid search in 2008 will surpass the $ 9.6 billion that was spent on all online advertising in 2004.

There are a number of reasons to believe that there will be even more paid search spending.

According to the "State of Search Engine Marketing" from SEMPO, 44 percent of the companies advertising on search engines started doing so in the past two years. These companies are likely to increase their budgets as they discover the results of search ads on their marketing.

Also, as marketers become more comfortable with advertisng on search engines, they buy more keywords. The more keywords they buy causes competion and leads to higher prices, which causes more overall spending to increase.

"The SEMPO research shows 36% of advertisers saying search marketing programs get their budgets newly allocated funds, rather than shifts away from existing programs," says Mr. Hallerman. "Again, new money continues to enter the arena."