Online advertising still booming

Online advertising in the US was worth $US25.5 billon in 2007, a 27% increase on 2006, according to data collected by technology research house IDC.

In the December quarter 2007 alone, online advertising was valued at $US7.3 billion, 28% higher than in the corresponding period in 2006.

Google, as the colossus in the market, was a key beneficiary of that spending growth, with its estimated US revenue growing 40% in the fourth quarter of 2007. Interestingly, however, despite this impressive growth Google’s total market share declined slightly in the December quarter, down 0.5% to 23.7% of the market.

Other big players in terms of market share are Yahoo, second with 11.4%, Microsoft on 5.6%, AOL on 5.2% and Fox Interactive Media at 3%.

Yahoo achieved a significant improvement in performance for the year, lifting growth of 2% in the first quarter 2007 to 22% by the December quarter. But IDC analysts say that it is still lagging a long way behind Google.

All that may be part of the explanation for Microsoft’s recent bid for Yahoo – IDC estimates that if the two were to combine, they would command a total 17% of the US online advertising spend.