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Google Continues to Be the Search Ad Market’s Dominant Player

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Google continues to be the dominant player 

In the last part of this series, we looked at the expected global digital ad spending in 2015. We also discussed why search ads command higher monetization rates.

Google (GOOG) (GOOGL) is the unrivaled leader in the search ad market. According to a report from eMarketer, Google will continue to maintain its share in the global search ad market. The report also mentioned that Google’s worldwide search ad revenue in 2015 will increase by 16% YoY (year-over-year) to $44.5 billion. This figure represents more than half of global search ad spending, or ~$81 billion, in 2015.

As the above chart shows, Google also maintained growth rates of 17%–18% over the last couple of years. It should be able to manage a healthy growth rate in 2015 as well.

Google attributed the healthy growth rate in search ads to the growth in its mobile search business.

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Mobile search is driving growth on Google websites

During the 4Q14 earnings call, Google noted that its mobile search business is driving revenue growth on Google websites. Its mobile search business growth is driven by two factors—it’s dominating share of the mobile search market and the fast growth of the overall mobile advertising market.

According to a report from StatCounter, Google owns an 87% share of the US mobile search market. Meanwhile, Yahoo (YHOO) and Microsoft (MSFT) Bing are two smaller players in this market. They have shares in the single digits. Google simply dominates this market.

Also, the overall mobile ad market is growing at a fast rate. According to a report from eMarketer, mobile ad spending could grow from ~$19 billion in 2014 to ~$66 billion in 2019. It grew at a CAGR (compound annual growth rate) of 28%.

Investors who want to gain access to the technology sector can consider ETFs like the Technology Select Sector SPDR ETF (XLK). Google, Microsoft, and Yahoo together account for 17.2% of XLK’s portfolio.

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