Technology

Google Gains Market Share in U.S. Mobile Ads


A new IDC report expects other winners this year to include Apple and Millennial Media. Among the losers: Yahoo and Microsoft

Google, owner of the world's most popular search engine, will widen its lead in the $877 million U.S. market for mobile advertising, ending the year with a 59 percent share, according to research firm IDC. Google's (GOOG) share will increase from 48.6 percent last year, before it bought mobile-ad network AdMob, IDC says. AdMob, which had an 8.4 percent share in 2009, was bought by Google in May. Apple (AAPL) may finish with less than 10 percent, IDC says. The U.S. mobile-ad market, including search and display ads, has more than doubled since last year, when it reached $368 million in sales. Companies are devoting larger slices of ad budgets to the wireless Web as more consumers and businesses get online via smartphones and other handheld devices. "Advertisers have embraced this in a big way," says Karsten Weide, a vice-president at IDC in Framingham, Mass. "They think it's a great marketing tool; they are flocking to it. The infrastructure and the audience are finally there to make this worthwhile." Google is making more headway in mobile ads than IDC estimated earlier this year, when it said Apple may end the year with 21 percent of the market and that Google would lose ground. The mobile-ad market may more than double again next year, to almost $2 billion, IDC says. The firm believes that while marketers spend just 3 percent of their online ad dollars on mobile today, the proportion will increase to 5 percent next year. Who's Up, Who's Down

Other beneficiaries of the boom in mobile advertising include Apple and independent ad network Millennial Media, Weide says. Apple, which bought ad network Quattro Wireless in January, wasn't in the mobile-ad business last year. Apple will end 2010 in second place, with an 8.4 percent share, according to IDC. Quattro had 5.4 percent of the market last year. Millennial will finish third, with 6.8 percent of the market, up from 5.4 percent. Yahoo! (YHOO) and Microsoft (MSFT) will lose market share this year, by IDC's reckoning. Yahoo will have 5.6 percent of the market, down from 7 percent last year. Microsoft will end the year with 4.3 percent, down from 6.3 percent. "We are seeing great momentum with our mobile advertising business," says Jonathan Tom, a marketing manager at Microsoft. Apple's mobile-ad service, iAd, has expanded to Japan and Europe and attracted more than half of the top 25 U.S. national advertisers since its July introduction, says Jason Roth, a spokesman for Apple. Mobile-ad companies typically don't break out their ad sales. Still, Google said during its third-quarter earnings call on Oct. 14 that its mobile business was likely to generate sales of more than $1 billion on an annual basis. IDC estimates that about $150 million of that revenue came from mobile applications and another portion from licensing fees, while mobile ads accounted for the bulk of sales. Projection Turnaround

Earlier this year, IDC projected Google would lose market share this year. It revised estimates after Google's October announcement. "Google is a lot bigger than we thought," Weide says. "We rectified that, based on the numbers they provided in their last earnings call." IDC says Google will keep adding share as its Android operating software for smartphones gains momentum. Android's share may surge to 25 percent of the worldwide smartphone market in 2014, up from 16 percent this year, IDC figures. Aaron Stein, a spokesman for Google, declined to comment. Millennial Media's Mack McKelvey and a representative of Yahoo didn't respond to requests for comment.

Kharif is a senior writer for Bloomberg Businessweek in Portland, Ore.

Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus