Google has long been criticized for relying too heavily on one source of revenue, but according to a story in BusinessWeek, it may soon have its first billion-dollar business outside of search advertising. Analysts predict revenues from the company’s display advertising business will rise as much as 40% this year, to slightly more than $1 billion. Most of that business will come from selling video and banner ads on YouTube, which Google acquired in 2005.
There is some urgency behind Google’s efforts to expand into display. The U.S. search advertising market is expected to grow only 5.6% this year, to $11.4 billion, according to researcher eMarketer, and Google has so much of the business it may struggle to grab more share. Display advertising, on the other hand, is projected to rise 8.2%, to $7.9 billion, and Google has only a small slice of the business. “You have to go somewhere else to get the next legs of growth,” says Jim Friedland, an analyst at Cowen & Co.
While Google lags well behind leaders such as Yahoo! in display advertising, it’s beginning to figure out how to use its strength in search to bolster the newer business. People conducted 2.8 billion searches on Google each day in December, according to the market research firm comScore. “Our goal is to bring the science of search to the art of display,” says Neal Mohan, the executive in charge of Google’s display business.
Photo by Google.