eMarketer gauges Google's share of paid search marketing and predicts what it will be in the years ahead.
The name Google can appear synonymous with all aspects of online search. However, with its revenue stream essentially flowing from this single source, Google will increasingly require alternative channels to maintain its spectacular revenue growth. Marketers might very well be the beneficiaries of these alternatives, especially when it comes to still-to-be-realized potential growth areas such as local search, video marketing and classified ads.
Nonetheless, Google's business today literally warps perceptions of search engines as a whole because it so dominates the space.
In Google's case, dominant means that its 2005 revenues made up nearly half of all US paid search ad spending, according to eMarketer estimates. By the end of this year, Google will grow only fatter, with a 57 percent share of this spending.
Looking globally, Google search (AdWords) and Google affiliates (AdSense) together will receive 66 percent of worldwide paid search ad revenues in 2006, according to SG Cowen. Search and affiliates for Yahoo! trail with a 28 percent share, while MSN and all the other search engines get by with only a 5 percent combined share.
According to the New York-based investment bank, percentage shares along these lines will not change radically through to the end of the decade.
By this point, Google's revenues for search advertising on its site and on its affiliate network will surpass $22 billion.
One reason Google will maintain its market share lead over its competitors is its spending on research and development. This investment in the future will hit $866 million this year, and its annual growth rate for R&D spending is higher than its two main rivals, Yahoo! and MSN.
The bottom line is that Google's worldwide gross revenues will reach more than $11.8 billion by the end of 2007, according to eMarketer estimates. Other researchers, such as Bear Stearns and Piper Jaffray, see even higher figures.
David Hallerman is a senior analyst at eMarketer. Information in this article was drawn from eMarketer's recent report Search Marketing: Players and Problems.