Big G has just been in the industry for less than a few years. That’s why it stunned just about everyone a few months ago when it published that its net company is on pace to bring in a few billion in annual profit.
The entity approaches the search industry in a very unique way than its competitors.
Big G automates the computers. Just about anyone with a credit card and a plan to send files can buy search ads online.
Right now, Google’s footprint in the space is relatively small. Unlike search, where the company grabs 60% of the advertising revenue in the U.S. market, Google has just a 15% share of the net business’s profits, according to IDC.
But 15% is good enough to beat the majory companies, which had previously held the top position for about as long as the online net establishment has been around.
It’s an even more stunning achievement considering that just 2.5% of the net ads served online are on Google’s network, according to the latest quarterly study by traffic tracker ComScore. That puts Google in fifth place, behind the likes of Facebook, Yahoo, Microsoft & AOL.
Analysts tend to downplay the ComScore number, which measures viewer impressions rather than cold, hard cash. In that battlefield, Google has quickly become really formidable.
“It’s not just our following large business, it’s already a big business,” Neal Mohan, Google’s vice president of search advertising products, told CNNMoney. “But there’s still tremendous room for growth.”
Citigroup’s mark Mahaney agrees, saying he expects that Google’s display business will grow up to 40% this year, determined mainly by market share gains against its rivals.
Google thinks the whole market is going to expand simple. Mohan estimates that the complete global net field is between $20 billion & $25 billion today. By 2015, he thinks it will double in size to $50 billion, & sometime or other grow as broad as $200 billion annually.
That will give companies abundant opportunities for in-video advertising campaigns. “As video becomes a more prominent medium on the Web, the predominant nature of advertising will become display,” Mohan predicts.
But there are some significant obstacles in the way. Online video usage has been surging for years, but the ad dollars have lagged. Mohan acknowledges a “disequilibrium” between the amount of time people spend on YouTube and the amount of money Google makes on it.
Advertisers are at rest with search ads because they’re so effective: The ads are directly related to meta keywords that a login name has typed in. A Google search for “flat screen TV,” for instance, currently returns extremely relevant ads for flat screen TVs at Wal-Mart (WMT, Fortune 500), Best Buy (BBY, Fortune 500) and Sears (SHLD, Fortune 500), among others.
Display ads can be more imaginative and interactive — but they’re also harder to create & harder to monetize.
