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November 14, 2012

Frost & Sullivan Report Finds that Online Search Advertising is Becoming King

By Tracey E. Schelmetic, TMCnet Contributor

In case anyone doubted that online search advertising is big business, new data from Frost & Sullivan (News - Alert) Australia confirms it. Online search advertising remains the strongest performing main segment of the online advertising industry, growing 29 percent in 2012 and outperforming online general advertising (such as online banner, sponsorships, integrated site content, advertorials, EDM / e-newsletters), online directories and online classifieds advertising, according to the new study.

For this reason, investing ad dollars into search continues to appeal to advertisers and agencies, especially in recent challenging economic times in many developed global economies.

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A significant portion of the growth and potential is due to the way consumers are using mobile devices. The new report, “Australian Online Search and Directories Market 2012,” found that a significant proportion of Australian consumers are using smartphones to search the Internet and access local information. Directions, businesses, restaurants or retail stores are common queries on mobile devices.

The search giants are paying attention to this growth and this market sector. Phil Harpur, Frost & Sullivan’s Senior Research manager, Australia & New Zealand ICT Practice, says Google and Microsoft’s (News - Alert) Bing are investing significant resources in improving mobile search functionality as search query volumes through handheld devices increases rapidly. Harpur also cited Yahoo’s important partnership with Bing.

“By leveraging the strength of both players – Yahoo! Search Marketing's strength in media and sales relationships and Bing's strength based on Microsoft's technology expertise, Yahoo! Search Marketing is positioning itself in the market as an alternate provider with strong performance, efficiency and good value for money" said Harpur in a statement announcing the new report.

While other players have risen to the challenge, Google (News - Alert) still dominates the industry. The search giant owns about 86 percent of the market share for online advertising in Australia.  Search advertising will continue to dominate Google's revenue for the at least the next five years, according to Frost & Sullivan.

Although Google's biggest opportunities are coming from new segments of its business, none account for a significant proportion of Google's revenue stream yet. The largest threat to Google's core search business is the expanding social network footprint, especially from Facebook (News - Alert), which offers a substitute to search for consumers, as well as for advertisers, as it is closed off to Google's core search business, said the analyst group.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Brooke Neuman
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