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Aug 20, 2008

Top portals' US online ad share shrinks for the first time in five years


Less Online Ad Spending - but Continued Double-Digit Growth

US advertisers will spend $24.9 billion on online advertising this year, eMarketer predicts. That’s $1 billion less than its previous estimate, issued in March, but still represents double-digit year-over-year growth of 17.4%, it said.

Social Networks Get Down to Business
AUGUST 18, 2008 

Think of them as digital water coolers—surrounded by thousands of workers engaged in serious business conversations.

Do business and socializing mix?

Apparently so. As the number of business users of social networks continues to increase, advertising expenditures will rise, too. In the US this year, advertisers will spend $40 million to reach a business audience on online social networks, and that is just the beginning. According to eMarketer projections, that ad spending will reach $210 million in 2012.

"As compelling as the ad growth is, marketers will spend far more over the next few years to create and manage their own social networks for business customers, partners, suppliers and vendors," says Debra Aho Williamson, senior analyst at eMarketer and author of the new report, B2B Marketing on Social Networks: Engaging the Business Audience. "These business networks will serve a range of purposes, from improving customer communication and collaboration to aiding product development."

A clear sign of the revolution in business thinking and behavior is the popularity of LinkedIn—the most widely known professional social network—where the audience has more than doubled in the past year, and the rise of additional business-oriented networks, including a raft of networks aimed at verticals.

In fact, vertical industry networks targeting just about any job description or category are proliferating. Among the most prominent are ITtoolbox, a 1.3-million-member community of information technology professionals; Legal OnRamp and LawLink for attorneys; and Reel-Exchange, for film and video professionals.

"Even Facebook has become a de facto B2B social network," says Ms. Williamson, "simply because so many business executives have joined it in the past year."

The giant social networking site may not consider itself to be in the B2B space, but a June 2008 deal with Visa, which created an application called Visa Business Network for small businesses on Facebook, signals that it will probably attract more advertising aimed at a growing business audience.

"With the growing popularity of professional social network Websites, businesspeople are changing how they build professional relationships and find jobs," says Ms. Williamson.

Top portals' US online ad share shrinks for the first time in five years

By Dave Porter

(AXcess News) Reno - An eMarketer report this morning forecasts strong resilience to the softening economy this year by the top portals, but while Google, Yahoo, MSN and AOL are doing well, other online advertising resources are slowly building market share.

eMarketer predicts that Google's US online ad revenues will increase by 27.4% in 2008, with the top four portals (Google, Yahoo, MSN and AOL) total US market share shrinking to 56.4% in 2008 compared to 57% the prior year.  While 0.6% of total yearly US market share of online advertising may seem like a small amount to lose, it's in fact the first time in five years that the top four web portals didn't see an increase.

According to eMarketer, the top four US web portals captured 48% of total US online advertising in 2004, which grew to 57% in 2007, but this year, even though eMarketer says they're 'unfazed by the economy', their market share is declining.

While the online advertising community watched as Google snapped up DoubleClick, all eyes were on the battle soon afterwards between Yahoo and Microsoft as to whether MSN and Yahoo would fall under the control of the Redmond, Washington-based software giant.  AOL has also faced risks as to its future under the watchful eye of parent company, Time Warner, with rumors flying of a pending spinout or sale.  So far, AOL has managed to remain outside the vacuum of takeover targets, not that Yahoo's Jerry Yang didn't try early on in his battle to keep Yahoo out of the hands of Microsoft.

So if the top portals' US online advertising market share is falling, then who's getting the traffic?  Those changes are coming on several fronts.  Local search is picking up steam, according to online researcher Borrell & Associates.   Competitive advertising networks such as Tribal Fusion, Real Media, Marchex, 7Search and Miva have all been sprucing up their customer interfaces while beefing their marketing efforts as well.  Combined, those figures probably represent far more than eMarketer is alluding to.

Cervella.com, a maverick media intelligence and web marketing organization whose niche is serving small PR agencies put it this way:  While the top four portals boast the majority of the US web ad dollars, the fact is the long-tail traffic is beginning to nip at their heels thanks in part to the number of websites being registered every month.

According to the June, 2008 Domain Name Industry Brief issued by Verisign, the global registry operator for .com and .net domains, the base of top level domains registered in the first quarter of 2008 grew by 26% year-over-year, representing 63 million new sites.  What that says is the web's getting crowded with more sites being registered every month and the bulk of those sites will most likely never generate enough traffic to catch the eye of the top four portals as potential "partner sites" to display advertising online, especially so are the number of top domain registrations outside the Tier 1 (US, CA, UK and AU) market.  So if that's the case, where are these new sites going to go if the top dogs won't let them run in their pack?

Enter those ad networks who've been creeping up the Big Four's US online advertising market share.

The new niche in online advertising is the long-traffic of the web and the task is trying to figure out how to coral that traffic into a meaningful resource that would be of interest to advertisers.  The PPC networks such as Miva7Search and Marchex have become the experts in long-tail traffic and weathered the storm of class-action suits brought about over click fraud.

Click fraud may sound like a dirty word that only applies to the low-end spectrum of the PPC market, but according to the latest Click Forensics Quarterly Newsletter, August, 2008, click fraud rates across the top portals, Google Adsense and Yahoo!, averaged 27.6% in the second quarter of 2008 compared to the overall industry average of 16.2%.  What that means is, not only do you pay a premium rate for US text link advertising across the major portals, but the rate of click fraud is nearly double the overall rate.  That means that size is necessarily the answer when it comes to web advertising and the long-tail kings of the web know it all too well.

The combination of local market developments, as Borrell's latest report indicates, is growing and taking market share while niche PPC networks are nipping away at the heels of the 'big four' and over time its going to add up, says Cervella's top guru.

"The fact is, Google, Yahoo, MSN and AOL are losing out to the niche networks who are beefing up their reporting capabilities with more powerful tracking tools and easier to use interfaces for customers to access," notes Cervella's top web analyst.  "They're also seeing more sites signing up to be publishers, taking away quite a bit of the market share the paid-to-report resources say is far less than reality." 

"We estimate the smaller ad networks will pick up more like 3 to 4% of the US online advertising market this year, far more than the 0.6% eMarketer predicts," concluded Cervella.

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