Display ads could make Google $1bn sales revenue this year
Google CEO Eric Schmidt said in July that display ads may be the company's next business to generate $1bn in sales. Analysts say 2010 is the year he will deliver on that prediction.
Display ads are likely to contribute more than $1bn, or about 4 to 5pc of Google's sales this year, up as much as 40pc over last year, says Doug Anmuth, an analyst at Barclays Capital in New York. That's an important threshold for Mountain View, California-based Google, which makes most of its sales from ads placed next to search results.
Demand for display ads, which include marketing messages in videos and graphical ads adorning web pages, may rise 8.2pc to $7.9bn this year in the US from a year earlier, according to research firm EMarketer. That's faster than the search market, which will expand 5.6pc to $11.4bn.
"You have to go somewhere else to get the next legs of growth," said Jim Friedland, an analyst at Cowen & Co in New York.
In display advertising, Google trails Yahoo!, which had revenue of $6.5bn in 2009, generated largely from its display ads.
Google has tried to catch up in part through acquisitions. Two of its largest are aimed at the display ad market. The company paid $1.65bn for YouTube in 2005 and $3.1bn for DoubleClick in 2007.
The video and banner ads on YouTube, the world's most popular video site, are expected, by analysts at Barclays, to contribute the bulk of Google's display revenue this year, about $700m. With DoubleClick, Google gained a technology that handles the placement of display ads on sites across the web.
"Display is now a key business," said Susan Wojcicki, Google's vice-president of product management.