If search was World War I, we are currently in the middle stages of World War II in display and a similar pattern is emerging. Yahoo! was once the market leader in search and today, Yahoo!’s search is powered by Bing.  As a result, Yahoo! has continued to lose search market share through 2010 (see figure 1).

Figure 1: EF Q3 State of the Market Report

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In display, where content is king, initially Yahoo! had a clear head start over Google. It owns some of the most trafficked and highly sort after content on the Internet. It has a long history operating in the display marketplace and understanding advertisers’ mindsets as it relates to that channel. It even first acquired a stake in a dedicated display exchange with the Right Media acquisition a few months prior to Google’s acquisition of DoubleClick largely for a similar purpose.

However, despite all these advantages, in 2010, advertiser spend trends are following what happened in search. Google via the DoubleClick Ad Exchange (now largely merged with the Google Content network to form the Google Display Network), has provided advertisers, agencies and vendor partners alike with a far more straightforward advertising platform to attract ever more of the biddable (aka. Tier 2 or Non Premium) display ad dollars.

Google’s platform incorporating many of the successful features of their AdWords platform for search has in particular allowed marketers who have never operated in the display ecosystem to much more easily begin campaigns on the channel. This includes the large spending direct response marketers who previously limited themselves to channels like search, email and affiliate marketing.

In 2010, according to Efficient Frontier client trends in the U.S .(figure 2 below), Google’s AdX has attracted more advertiser dollars as the year has progressed. In Q4 thus far, this has represented about 70% of advertisers’ display media spend outlay. One point that should be noted is that Yahoo, which makes up a large portion of the RMX inventory, put less of their owned and operated properties’ inventory on the Exchange.

Figure 2: EF US Client Display Proportional Spend 2010

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Looks like history is beginning to repeat itself.

Chris Jacob

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