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Downturn Tightening Google's Grip on Internet Advertising -- per new IAB #s

Google continues to rapidly take revenue share of overall U.S. Internet advertising, per the latest released IAB industry figures.

As the overall Internet advertising growth rate slows from 26% in 2007 to 15% for IH08, Google is strengthening its relative grip  on the overall Internet advertising market in the United States, not just the search market that Google is well known to increasingly dominate with 71% share of searches per Hitwise.  

  • What the IAB overall data show is that:
    • Google's market power and networks effects appear to extend more broadly into the overall Internet advertising market; and
    • If allowed to partner with Yahoo, Google-Yahoo, in one fell swoop, would dominate the overall U.S. Internet advertising market that IAB measures. 

Per the new IAB data on the overall U.S. advertising market:

  • Google's revenue share is 45% for 1H08 up from 41% in 2007 and 35% in 2006.
  • Yahoo's revenue share is 22% for 1H08 flat from 22% in 2007 and down from 26% in 2006.
  • Partnered, Google-Yahoo's revenue share is 67% up from 63% in 2007 and 61% in 2006.

Sources: IAB 2007 report, Yahoo 2007, Google 2007Google 2Q08, Yahoo 2Q08

With Google's earnings October 16th and Yahoo's October 21st, I expect we will see more evidence of Google's growing market power, i.e. relative strength of Google vis a vis Yahoo and its other competitors.

  • As I explained in detail in my Googleopoly II white paper, Google has at least 26 sources of market power and network effects which ensure that it will continue to take revenue market share.

Bottom line:

  • The evidence continues to mount that the search advertising  market has tipped to Googleopoly.
  • In addition, the revenue market share evidence from IAB continues to mount that Google is extending its search market power into the broader Internet advertising market.