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Google’s Ad Market Share Slipped In Q4 2007

A tiny slip, but the first in two years

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Slow growth in fourth quarter domestic ad sales gave Google its first downward push on net US market share.

The decline represented a half-percent change, dropping Google’s leading hold on US Internet advertising to 23.7 percent of the market, compared to Q3 2007. Research by IDC found Google’s estimated ad sales before traffic acquisition costs grew by a little more than 40 percent year-over-year in the fourth quarter of 2007.

That would be great, except the third quarter year-over-year growth reached the 50 percent mark. In 2007, full year US online ad spending reached $25.5 billion, 27 percent better than 2006.

Overall fourth quarter ad spending reached $7.3 billion, as advertisers reached out to the holiday shopping crowd. This spending increased almost 28 percent from Q4 2006 figures.

IDC’s Karsten Weide also commented on the Microsoft-Yahoo situation. Yahoo recently rejected a $44.6 billion takeover bid by Microsoft, which plans to press shareholders to support the acquisition.

“The combined entity would have a net U.S. advertising market share of about 17% based on our 4Q07 data,” said Weide.. “It would not quite bring Microsoft-Yahoo! to where Google is in online advertising in the U. S., but it would give them a much better fighting chance than if they went it alone.”

Microsoft likely will see this as encouraging. Between Google’s decline and the potential to be within single digits of ad market share, Microsoft could use that as a selling point to the institutional investors to pressure Yahoo’s board to make a deal.

Google’s Ad Market Share Slipped In Q4 2007
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