This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Apple Gains in Mobile Ad Market

Google (GOOG - Get Report) , Microsoft (MSFT - Get Report), and Yahoo! (YHOO - Get Report) have all lost share in the U.S. mobile advertising market since Apple's (AAPL - Get Report) 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.

Apple 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.

Last year, advertisers spent $128 million on mobile search and display advertising in the U.S., according to eMarketer research cited in the Wall Street Journal. 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.

However, the mobile ad market is growing rapidly and could be worth around $2 billion by 2014, according to a recent report from BIA/Kelsey.

We expect Google to post about $21 billion in advertising revenues this year vs. $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.

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 2014.

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.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $122.99 -0.32%
GOOG $631.93 0.63%
MSFT $46.29 2.10%
YHOO $37.67 -0.13%
FB $96.99 1.78%

Markets

Chart of I:DJI
DOW 17,751.39 +121.12 0.69%
S&P 500 2,108.57 +15.32 0.73%
NASDAQ 5,111.7330 +22.5270 0.44%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs