More NewsMeeker: Interactive Ads By the Numbers

Meeker: Interactive Ads By the Numbers

Google and Yahoo! hold the greatest market share among recipients of online advertising, and they distribute the wealth widely among their partners.

SAN FRANCISCO – Yahoo and Google bring in the lion’s share of Internet advertising revenues, each accounting for more than 20 percent of the market. That’s according to Morgan Stanley’s Mary Meeker, who spoke at the Web 2.0 conference in San Francisco.

In the second quarter of 2004, Yahoo held 23 percent market share to Google’s 20 percent. One year later, the gap between the two closed. Google and Yahoo each held a 27 percent market share. Meeker said she came to her conclusions by looking at Interactive Advertising Bureau (IAB) data and the companies’ own numbers.

But Google and Yahoo are sharing that wealth, paying out millions to their partners. Of the $1.4 billion Google generated in gross online advertising, $494 million went out to thousands of partners including America Online, Ask Jeeves, and iVillage. For its part, Yahoo’s second-quarter gross online revenues of $1.1 billion paid out an estimated $378 million to its partners including MSN, ESPN, and The Wall Street Journal.

Besides detailing the two companies’ impact on online advertising, Meeker painted a picture of a broadband, mobile and Wi-Fi-fueled explosion of innovation. Specifically, Meeker said that broadband penetration in the U.S. had reached the “sweet spot” of 25 to 30 percent penetration and would reach more than 50 percent of households by 2011. In the mobile arena, Meeker said North America lags, representing only 11 percent of global subscribers. Online, the continent accounts for 23 percent of users. Globally, there are around twice as many (two billion) mobile subscribers as Internet users (1 billion), Meeker said.

Advertising accounts for 36 percent of revenues generated over the Internet, but Meeker didn’t give an analogous figure for the mobile Web. Mobile content categories that lend themselves to marketing include: personalization (35 percent of revenues); information and infotainment (24 percent); search and directories (16 percent); games (10 percent); and music and video (four percent).

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