Google knocks Yahoo! off display ad top spot

Google is now the largest online display advertiser in the US in terms of revenues, knocking Yahoo! off its perch, according to figures from IDC. The report shows Google overtaking Yahoo! with 14.7% of the market in Q1 2011, up from 13.3% in the same period last year. Overall, the display advertising market boomed in the first quarter, with ad revenues hitting USD7.3bn - the highest Q1 revenue for the industry ever, according to figures from the IAB and PwC.

Yahoo!'s market share is dropping almost as quickly as Google's is rising, dropping to 12.3%, down from 13.3% last year. This makes Google market leader in both display advertising and search, where it is the long-established number one. This shift comes as search ad revenues are squeezed by display, which now has a higher market worth.

This is positive news for Google, which is trying to expand beyond its core search business. It says it is on track to make USD2.5bn from display advertising and recently launched a new ad format on YouTube, a key player in its display business. YouTube's UK head, Bruce Daisley, told StrategyEye that Google had a "strong" focus on display advertising.

"Mobiles and display are already a USD2bn business, so we're already in a very strong position there," he says. "Search is an important part of our business, but the whole of our display is very strong as well. We've already migrated away from just search, just a lot of people haven't noticed yet."

But Google and Yahoo! face a growing threat from Facebook, which is establishing a strong position in the market. It already serves more display ads than Google and Yahoo! put together, with 346bn ad impressions, although it still trails its competitors in term of revenues because of the low CPM rates its ads attract. However, analyst predict that the sheer number of ads it serves and its predicted strong growth mean it will overtake its competitors in display ad revenues by the end of the year.

Nevertheless,  YouTube and eBay, another player in the resurgent market, remain dismissive of Facebook's approach, with eBay's European display ad chief telling StrategyEye, "I don't fully understand Facebook's strategy - I'm not sure they're clear on what they're going to do [with display advertising]."