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Google Internet Ad Assault Still Hurting Yahoo!, Bing and Content Publishers

NEW YORK (TheStreet) -- As ad space on the Internet is getting cheaper, advertising networks managed by Yahoo! (YHOO - Get Report) are becoming less profitable than the larger Google (GOOG - Get Report) AdSense network, a report published on Wednesday by Adobe showed.

For content publishers, competition with the low-priced ads of search engines is getting tougher, the study said. Content may still be king, but it's not good to be the king when advertisers can reach your whole audience at low, low rates.

Adobe has been following the Internet ad market for two years, since its 2012 acquisition of Efficient Frontier, a company that maximizes digital advertising in Internet search and social media. Its latest report, released on June 16, analyzed $2 billion in direct ad spending.

That analysis showed that U.S. ad spending rose by 9% year over year.

According to another study released in April 2014, the total online ad spending reached $12.1 billion in the last quarter of 2013, well above spending in other media such as cable TV and print. The quick expansion, mainly in mobile and online, is attracting investors' attention.

Adobe's two-year study shows that Google's 78% share of the market was unchanged, as was Yahoo!-Bing's 22% share. Google's click-through rates, or CTR, and cost per click continue to rise, while CPC at the Yahoo!-Bing network fell 6%.

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Yahoo!-Bing, the industry's second-largest ad network, remains strong in mobile. Adobe expects Yahoo!-Bing's market share to improve slightly in the second half of the year, taking advantage of its low CPC.

Owners of smartphones are clicking on more ads, while tablet clicking is stable and desktop is falling, said Tim Waddell, director of product marketing for advertising solutions at Adobe. Desktops now represent 70% of clicks, smartphones 15% and tablets 14%.

Waddell credited Google's new ad formats and enhanced campaigns for its improved CTR. Ads that were once posted inside a yellow box are now above regular results, with the same white background as other content and customers clicked on them more often.

"The enhanced campaigns are having a good impact on the market just because of the new dimensions you can optimize around -- device, place, time, audience -- it's something we look forward to using," he said.

Remarketing lists for search ads have also shown big increases in CTR, but it remains to be seen whether it improves return on investment, according to the research.

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