• by Laurie Sullivan  @lauriesullivan, March 1, 2011

Companies will spend more than one in five U.S. ad dollars this year to purchase display ads in Facebook, displacing Yahoo for the first time as the No. 1 revenue-generating site. David Hallerman, eMarketer principal analyst, estimates that display ad revenue for the social network will rise 80.9% to $2.19 billion this year. Facebook's ability to capture 21.6% of all U.S. display ad dollars takes the No. 1 space traditionally held by Yahoo, which should still see 16.4% growth in display ad sales this year and 16.3% in 2012.

Google will rise from 12.6% growth this year to 16.7% in 2012, according to eMarketer estimates. AOL will lose share of revenue, dropping from 4.4% in 2011 to 3.7% in 2012. Google will also increase market share this year by nearly 4% to 75.2%, followed by Microsoft at 10.8% to 11.1%. Yahoo will decline from 8.1% to 6.5%, and AOL from 1.9% to 1.5%, respectively.

Hallerman recognizes that U.S. paid-search market share "is more and more a two-company game," yet no real competition exists. Although Bing is gaining revenue, Google's share is still rising as the combined revenue at Microsoft and Yahoo continues to fall," he says.

Clix Marketing founder David Szetela says the paid-search market share numbers are not as positive as some search marketing professionals would like, and that the Bing-Yahoo alliance may be "blowing their big chance to compete with Google."

The combined search ad traffic should have been close to 30%, but it's not, according to Szetela. "It's not clear whether Microsoft is consciously serving fewer ads than Yahoo or Google, or whether it's a buggy algorithm -- but the combined volume of Yahoo and Microsoft search ad-delivered clicks has decreased since the alliance," he says, pointing to an explanation on the Rimm-Kaufman Group blog.

A study from Marin Software analyzing the impact of the Bing-Yahoo search alliance on paid-search marketing released late in February suggests that adjusted cost per clicks began as being roughly equal to Google, but after the transition the CPCs trended lower than Google, ending 2010 at a 20% disadvantage.

The results from the analysis discussed at OMMA Global in San Francisco found that click-through rates on Bing and Yahoo were roughly equivalent to Google, but declined in November. CPCs were consistently below Google, trending down post-transition. Conversion rates dipped during the transition, but ended 13% higher in 2010, and cost per actions rose during the transition but finished 17% lower in the long run.

"While Bing still lags in terms of wallet share growth, the trends since the rollout of the Yahoo-Bing Search Alliance have shown promise for Microsoft," says Matt Lawson, vice president of marketing at Marin. "Not all advertisers have made the transition to the search alliance, but those that have are seeing an increased share of clicks coming from their Yahoo-Bing campaigns relative to Google. Since clicks are half of the revenue equation in paid search, this represents an important shift. If advertisers begin to act on this trend, expect revenue growth rates to become more competitive as costs-per-click rise."