Internet Ad Forecast: Google, Facebook Expand Clout

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A realignment of power on the Web will continue this year, researchers at eMarketer predict, as Facebook grabs the top spot in the online market for banner, interactive and video ads.

Meanwhile, Google will extend its dominance in the U.S. market for advertisements related to Web searches, the firm says.

Despite an alliance between Microsoft’s Bing search engine and Yahoo–which is now letting Bing power Web searches on its sites–Google is expected to increase its lead over those combined forces in terms of ad revenue in the U.S., eMarketer says, in a report scheduled for release Tuesday.

The firm predicts Google will increase its share of the $15 billion U.S. search-ad market to more than 75% from 71.4% last year. Microsoft’s share will also increase, but more slightly–to 10.8%, up from 10.2% in 2010–while Yahoo’s search-ad share will continue its steady decline, reaching 8.1% this year, down from 10.4% last year, eMarketer says.

Some industry observers “want to see the giant fall, but it’s not,” says David Hallerman, an eMarketer analyst. “The business at Google is continuing to be strong.”

The most eye-catching moves, however, are occurring in the U.S. market for banner, interactive and video ads—a category also known as display—where Facebook is rapidly rising.

Facebook should boost its share of the $10.1 billion U.S. display-ad market to 21.6% from 13.6% in 2010, as more big brands begin marketing on such sites, eMarketer says. That means Facebook ad revenue could reach nearly $2.2 billion this year.

Google has stepped up its efforts to service both advertisers and website publishers in the purchase and sale of display ads on sites across the Web, in a process called real-time bidding. The company should grab 12.6% of the U.S. display-ad market by the end of the year, or $1.3 billion, up from 9.6% last year, eMarketer says.

Earlier Monday, Neal Mohan, Google’s vice president for product management, said the display market could top $100 billion globally over the next several years and represents “a pretty enormous opportunity” for Google.

Facebook and Google are continuing to grow faster than Yahoo, whose bread and butter is selling display ads on its popular sports, finance and news sites–as well as competing with Google to help advertisers find space to place ads on non-Yahoo sites. Despite seeing its display revenue increase by 15% overall in 2010, Yahoo’s share of the U.S. market will rise by just 0.3% this year, to 16.4%, or $1.65 billion, eMarketer says.

A Yahoo spokeswoman declined to comment. But the company touched on such issues in a regulatory filing Monday: “Social networking sites in particular are attracting a substantial and increasing share of users and users’ online time, which could enable them to attract an increasing share of online advertising dollars.”

Hallerman says “the fact that Yahoo can have strong growth and still drop in the standings points to how strong display advertising is as more and more big-brand advertisers are coming online.”

The consolidation of power among the Internet’s elite companies is also continuing. Google, Yahoo, Facebook, Microsoft and AOL Inc. together received 65.3% of all U.S. online ad spending last year, a figure that will climb to 71.2% this year. The U.S. Internet ad market will reach $28.5 billion this year, up from $25.8 billion, eMarketer says.

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