Search engine ads projected to lose ground

Posted by Mark Raby

Framingham (MA) - Though search advertising is expected to retain its #1 position in the market of online ads, research firm IDC says it will slowly lose market share over the next five years.

Internet advertising saw about $16.9 billion in revenue last year, and IDC says that in 2011 that amount will grow to $31.3 billion, an increase of 13.5%.  Emerging forms of digital advertisement will eat up a lot of that growth, leaving search advertising to drop in market share from 40% in 2006 to 32% in 2011.

IDC says this could cause problems for Google, which relies on search advertising for more than 99% of its income.  The firm says online video ads are quickly becoming more appealing to advertisers, as broadband penetration increases.  Streaming video advertising catches viewers more easily, too, as most streaming players prevent users from skipping sponsored ad messages.

IDC predicts that search advertising will still continue to grow in terms of absolute dollar values, but more advanced advertising areas like video will grow more quickly.