Google, Microsoft and Yahoo have all lost share in the
U.S. mobile advertising market since Apple's iAd platform debuted
in July 2010,
according to recent estimates that the market
research firm IDC provided to Bloomberg BusinessWeek
. iAd is a mobile ad network that application developers use to
incorporate advertising into their apps.
) entered the mobile ad market last year. IDC expects its market
share to reach 21% in 2010. Meanwhile, Google's (
) share is expected to decline from 27% in 2009 to 21% by 2010.
Similarly, Microsoft (
) and Yahoo (
) are expected to see their market share drop from 10% to 7% and
from 12% to 9% respectively.
In a recent article, we argued that
iAd could potentially boost Apple's stock by 5%
if the new platform encourages users to spend more time viewing
mobile ads. Given that the U.S. mobile advertising market is
currently a small fraction of the PC-based advertising market,
however, we see little impact on Google, Yahoo or Microsoft's stock
prices. Our analysis follows below.
Mobile ad market: small but growing
Last year, advertisers spent $128 million on mobile search and
display advertising in the U.S.,
according to eMarketer research cited in the Wall
. Mobile ad spending is expected to read $187 million in 2010.
That's still tiny compared to the U.S. PC Internet search market,
which was worth $10.9 billion in 2009 according to Credit Suisse
(also cited in the Wall Street Journal).
However, the mobile ad market is growing rapidly and could be
worth around $2 billion by 2014, according to a recent report from
media industry research firm BIA/Kelsey.
We expect Google to post about $21 billion in advertising
revenues this year, versus $4.7 billion for Yahoo and $2.7 billion
for Microsoft. Based on IDC's market share estimates, we estimate
that Google's mobile ad revenues will total $39 million this year,
or 0.18% of total ad revenues. Yahoo's mobile ad revenues should
come in at around $17 million, or 0.36% of total ad revenues. We
estimate Microsoft's 2010 mobile ad revenues at about $13 million,
or 0.48% of total ad revenues.
Potential impact on Yahoo's stock
Yahoo seems to have the most to lose from Apple's sudden rise in
the mobile advertising market. Assume that Yahoo loses another 5%
of market share over the next four years. In this scenario, Yahoo
would give up $100 million in potential revenues between now and
We currently expect traffic on Yahoo sites to increase from an
average of 590 million monthly unique visitors in 2009 to 725
million by 2014. But if Yahoo loses another 5% of the mobile
advertising market over the next four years, we would expect the
average monthly unique visitor total to reach only 697 million by
2014. This scenario yields a potential downside of around 1% to the
$19 Trefis price estimate for Yahoo's stock.
Given that mobile advertising represents an even smaller
percentage of total revenues for Google and Microsoft, we estimate
the downside impact to their stocks at less than 1%.
You can see the complete $19.04 Trefis Price
estimate for Yahoo's stock here.
You can see the complete $638 Trefis Price estimate
for Google's stock here.
You can see the complete $28.06 Trefis Price
estimate for Microsoft's stock here