Since it burst onto the scene almost a decade ago, Google (GOOG) has grown revenue in three ways:
- Search market growth (number of searches)
- Search share growth (share of market)
- Revenue per search growth (paid click and price per click growth)
Based on recent search share trends, Google is about to lose one of these growth engines: share growth.
Over the past eight years, Google has grown from 0% share of the search market to 60%-plus (higher internationally). These share gains have come at the expense of Yahoo, Microsoft, AOL, and the rest of the search market.
Six months ago, with Google continuing to gain almost 0.5% of share per month, it seemed inevitable that Google would quickly march to 80% of the US market, leaving everyone else with crumbs. Over the past six months, however, Google’s share has flattened in the 63% range…while Yahoo’s share losses have stopped at just over 20%.
In most countries outside the U.S., Google usually has even more than 65% of the market, so in these countries, it has little share left to gain.
It therefore seems that one of the three Google growth drivers–market share gains–may have run its course. If Yahoo can hold onto its 20% share in the U.S., meanwhile, this is good news for shareholders, many of whom had written the search business off for dead.
Here are the search share trends over the past 25 months, per Comscore: