Search Engine Advertising to Reach $5.6 billion in 2005?
Search engine shares in Google and Yahoo rose today as analyst forecasts showed that the search engine advertising industry may reach a record $5.6 billion in 2005. The Associated Press reports that “Investors moved into both Google and Yahoo shares, making technology stocks one of the overall market’s main drivers. Google shares rose $5.69, or 2 percent, to $285.25 in afternoon trading on the Nasdaq, while shares of Yahoo jumped 81 cents, or 2.2 percent, to $37.44.”
“We continue to believe that broadband growth is driving Internet traffic growth,” Merrill Lynch analyst Lauren Rich Fine told the AP. “Especially with recent discounts by broadband providers, we believe this will drive more users online or to simply switch from dial-up connections to high bandwidth connections.”
The story, Google and Yahoo Seen Boosted by Ad Surge went into more depth on the escalating growth of the Search Engine Marketing industry:
Neither of the two Internet search companies show any signs of slowing down, according to Smith Barney analyst Mark Mahaney. The brokerage initiated coverage on both Google and Yahoo at a “Buy” rating, while assigning a “Hold” for eBay Inc. and Amazon Inc.
For Yahoo, Mahaney said the company has “broad exposure to the strong secular growth of Internet advertising” and the emerging online subscription business. The analyst believes Yahoo is poised for continued margin expansion under what he believes is a strong management team.
Mahaney also pointed out strong growth in online advertising as a major reason behind Google’s success, adding that search advertising is one of “the most robust” online advertising segments. He said Google also can expand beyond the traditional search business, much like Yahoo or Microsoft have with the addition of products such as music and shopping.
In other news, a Reuter’s business article today listed Google as the “most highly valued media company this week, surpassing Time Warner Inc. in just 10 months of trading as a public company.”
“With a current stock market capitalization of more than $80 billion, Google is now worth more than any other media company in the world. That includes Time Warner, created five years ago when AOL purchased Time Warner for $106 billion in a much-hyped combination of old and new media.”
