Google Inc. has extended its dominance in the worldwide search advertising market amid challenges from Microsoft’s Bing and rising competitive obstacles in fast-growing regions, says a report from IHS iSuppli.

IHS estimated Google’s full-year search advertising revenue last year rose 20 percent to $25.4 billion. This gave Google, which is set to release its fourth-quarter earnings on Thursday, a market share of 83 percent in 2010, up from 81 percent in 2009.

Google’s revenue growth was even stronger in display and mobile advertising, IHS said, and that the search engine giant's total revenue are expected to reach $28.9 billion in 2010, up 22.5 percent from 2009.

With the arrival of Microsoft’s Bing and rising competitive obstacles in fast-growing regions including China, Russia and South Korea, 2010 seemed like it might be the year that Google would surrender some of its dominance in the global search advertising market, said IHS analyst Vincent Letang. However, even amid these challenges, Google managed to outgrow the overall market.

The global search advertising market rose 17 percent to $30.4 billion in 2010.

Google’s revenue growth stands on three sturdy pillars: search, video/display and mobile, Letang said. The search pillar represents Google’s cash cow, fueling current revenues, while the video and display pillar generate short-term revenue growth. The nascent mobile pillar provides long-term growth insurance.

Display revenue rose by an estimated 61 percent last year, helped by the success of Google’s subsidiaries YouTube and DoubleClick, IHS said.
On the mobile ad side, Google benefitted from revenue generated by the increasing popularity of the Android operating system and the company’s acquisition of AdMob.

While Google remains the undisputed leader in most major markets, there are rising competitive obstacles in fast-growing regions including China, Russia and South Korea, IHS said. In these markets, the dominant search engines belong to local operators.

The business information company said the only real challenge for Google actually may lurk in the rising tide of social media, rather than in competitive search engines.

Letang views the association of Microsoft with Facebook and its 500 million-plus users a much bigger threat to Google’s dominance of the Internet than the Yahoo-Microsoft deal or the company’s legal issues.

Social networking is the only major Internet trend where Google has failed to make its mark by either acquiring or developing strong products, despite semi-failed short-lived attempts, Letang said.

Letang said Facebook’s global advertising revenues were estimated at between $1.2 billion for the first nine months of 2010, and the company has now firmly established itself as a cost-effective marketing destination for many major brands.

The main concern, from a Google perspective, is that by providing similar scalability and accountability along with more focused targeting, social marketing may become a viable alternative to both search engine marketing and display, Letang said.

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