• MarketWatch, Wednesday, October 18, 2006 11:30 AM

A day after Yahoo's highly publicized announcement of a 37 percent drop in net profit, eMarketer has issued a report that says Google, its chief rival, is on track to pocket 25 percent of U.S. online ad spending this year. By year's end, the research aggregator expects the search giant to take in $4 billion of the $16 billion advertisers will spend on the Web.

But let's be fair to Yahoo. Google reported revenues of $6.139 billion for 2005, $3.745 billion of which came from its U.S. operations. That means an increase of just $300 million, or about 7 percent, year-over-year from its U.S. operations--an indication that its core U.S. business is settling after two years of stunning growth.

It should be noted that the eMarketer report erroneously states that Google's U.S. ad revenues were $2.4 billion in 2005--when, in fact, that number refers to its international revenues, which were attributable to 39 percent of Google's 2005 revenue. This also means that Google's quarter share of U.S. online spending is actually a decrease over last year, which was closer to one-third (31 percent).

Nevertheless, Google continues to pull away from Yahoo. eMarketer expects Yahoo to record $2.86 billion in U.S. ad revenue, or an 18 percent share--which isn't too shabby, and is a smaller year-over-year decrease than Google.

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