Search ad revenues remain the driving force behind the big search engines, Google and Microsoft’s Bing. However, the rise of display advertising and the threat of “new” competitors in the display arena, such as Facebook, are causing the search engines to scramble for a way to get a bigger piece of the display pie.
While Yahoo is seeing a big shift in revenue, and as Facebook builds its advertiser base, Google is working through new products and strategic acquisitions to move itself into a more dominant role in the display advertising business.
Google and Facebook, once potential frienemies – now may see themselves competing for the same advertisers as Google+ launches as the next competitor to Facebook’s social media empire.
Search & Display By The Numbers
While Google and Microsoft lead the industry in search ad revenues, they trail Facebook and Yahoo in display ad revenues. According to June data from eMarketer, Google should have a commanding 77% of the search ad revenues in 2012, but only realize 12.3% of the display revenue in the same year.
Microsoft’s search ad revenue will finally surpass Yahoo’s search ad revenue in 2011, as Microsoft starts to see the benefits of the Search Alliance in their favor. However, Yahoo’s display revenue shadows Microsoft’s and will only begin to lose the first position to Facebook this year.
Facebook Is A “New” Competitor
Facebook’s growth does not seem to be negatively affecting search ad revenue as they find themselves as the force to be reckoned with in the display arena. Currently, Google may not be greatly affected by Facebook, as Yahoo is seeing the biggest hit.
It seems as if Yahoo’s display advertising revenue is moving straight over to Facebook, which reminds me of a conversation with a Yahoo colleague – eagerly pointing out that Google may be the least of their worries.
eMarketers principal analyst David Hallerman summarizes why Facebook is seeing this surge; “Facebook’s distinctive form of display advertising is increasingly attracting advertisers. These are mainly smaller companies, and some of them have a strong direct-response focus.”
According to eMarketer, Facebook and Google look to be going after the same clients: small-to-medium sized advertisers. Today, they each seem to be moving forward at their own pace; however, this could turn into a point of competition.
Google Spending Money To Keep Up
Google may see the writing on the wall with the recent purchase of Admeld, they are making a push to increase their display advertising offering. In a blog post from Google’s Vice President of Display Advertising, Neal Mohan, he states the importance of this concentration.
“It’s now clear that investments in new technologies, new ad formats and improved buying and selling processes are helping to grow the display advertising pie. This benefits publishers who make more money from display ads, users who receive free ad-funded content and marketers who are able to grow their businesses online.”
Facebook’s surge in display revenue may be directly correlated to their time-on-site statistics. Google has been desperately trying to move themselves away from a “search portal” to an actual “destination” on the Internet, as seen in the launch of Google+ most recently.
With an already robust offering, potentially supported by its current Adwords (search, contextual and display) base of advertisers, and immediate access to millions of users, Google+ could be the way Google builds out their display offering.
Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.