Google Continues Search Dominance

NEW YORK It appears Google’s competitors in Internet search have an uphill climb. New research shows how the company is putting even more distance between itself and its rivals.
Efficient Frontier, a search-marketing tech provider, examined more than 17 billion impressions and 270 million clicks on search ads running through its system during the fourth quarter of 2007 and the same period a year earlier. The results show the yawning gap Google has opened with its rivals, Microsoft and Yahoo!, because it continues to attract a growing majority of Internet searches.
Google’s share of search spending was 77 percent in the latest holiday quarter, up from 71 percent a year earlier. During the same period, Yahoo!’s share dropped by 25 percent, from 24 percent of the market to 17 percent. Microsoft remained a small presence, taking just 6 percent of the market, up from 5 percent in the year-ago period.
The extent of Google’s dominance is even clearer in where new search spending goes. Overall search ad spending increased 29 percent from Q4 2006 to Q4 2007. Nearly all of it (97 percent) went to Google.
While Efficient Frontier noted some bright spots for competitors—Microsoft, for instance, has a higher conversion rate on clicks than Google, and Yahoo!’s Panama ad system has closed the monetization gap—it found that they face a daunting challenge: Google will continue to attract the lion’s share of search ad spending simply because it gets a disproportionate amount of searches. That extra spending makes it even bigger, further cementing its attractiveness to new ad spending.

“It speaks to Google being the dominant brand right now,” said Ellen Siminoff, CEO of Efficient Frontier. “Yahoo!’s going to have do better on brand and product innovation.”

A report issued earlier today by RBC Capital Markets and SearchIgnite found that Yahoo!’s gains from its new search ad system are tailing off. That report also had Google gaining search market share at Yahoo!’s expense.