The Internet-advertisement industry is one of the fastest growing markets in the technology sector. With earnings season in full swing, investors can get an update on which companies are making headway in this space.
The US advertisement industry is one of the fastest-growing entities in the entire stock market. This huge industry has been supported by the rise in handheld devices, which ensure that users are connected to the Internet at all times. As compared to PC consumers stuck with bulky devices, which are much more difficult to carry around, handheld users can go online at any time.
This single fact has significantly increased the amount of time that users spend online and is the primary reason behind the high expectations surrounding this industry. According to data collected by Reuters, the US Internet-advertisement market grew by 15% last year and currently stands at approximately $36.6 billion. More data from PWC reveals that the key to growth in this space is handheld devices with revenue from smartphones doubling last year.
The competition in the US-advertisement arena is getting pretty tough with Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB) leading the way. Google currently holds the number-one position in the US advertisement industry with a market share of approximately 50%, followed by Facebook Inc (NASDAQ:FB). Google Inc (NASDAQ:GOOG) has reported total US advertisement revenue of approximately $17 billion.
The display-ads market is a different story, and is being led by Facebook Inc (NASDAQ:FB), which has total revenue of $2.6 billion. Google is quickly catching up with Facebook Inc (NASDAQ:FB) in the display segment, as well, and some analysts expect that Google Inc (NASDAQ:GOOG)’s market share will exceed that of Facebook by the end of 2014.
Yahoo! Inc. (NASDAQ:YHOO) is currently at the third position in the display segment and saw negative growth during the quarter. During the quarter, there was an 11% decline and ‘ads sold’ fell approximately 7% year-over-year.
One of the major reasons for this performance was the redesign of the Yahoo! Inc. (NASDAQ:YHOO) homepage and email, which meant that multiple engagement trends were redefined. The search revenue saw a slightly better quarter, with y-o-y growth of 6.5% (10% of the closure of Korean operations are excluded). There was a significant increase of 16% in paid clicks, but it was somewhat offset by a 7% decline in CPC.