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March 19, 2007

Recently, some industry analysts have talked about the "de-portalization of the Internet" and the "ultimate death of the portal as we know it." However, a glimpse at the numbers show that their premonitions are largely premature and reveal a certain degree of pessimism.

Some estimate that net U.S. ad revenues at Google, Yahoo, AOL and MSN represent about 57.4 percent of the projected total online ad spend for this this year.

Overall, the portal segment of the ad spending pie is increasing, not decreasing. In 2006, it's estimated that overall ad spending at the four major portal sites will account for about 67 percent of total Internet ad revenues.

David Hallerman, eMarketer senior analyst said "as traditional marketers transit more money online, they look for safety in established, mass-market brands, and portals are just that."

Hallerman added "other than Google, the large portals are at least 10 years old, and all four average 100 million or more unique visitors monthly."

The top portals will all increase in U.S. net ad revenues for this year, with nearly $13 billion going to just those four sites. And the revenue rankings will remain the same as last year, says eMarketer.

"However, when you analyze ad revenues by growth rates, another pattern emerges," says Mr. Hallerman. "For example, the annual increases at Google are getting smaller each year, but they are still far above any other portal."

On the other hand, at MSN and AOL, ad revenue growth is ascending each year, with spectacular 36 percent plus gains at AOL. In that perspective, the portal's revamped structure appears to be working out.

Overall, revenue growth at Yahoo remains fairly flat, with approximately 20 percent of gains in last year and for 2007.

This is due to the ongoing problems Yahoo has with paid search revenues, which are not performing as well as the display ads on the other pages.

"Industry prognostications aside, the idea of a portal isn't going away," says Mr. Hallerman. "A something-for-everyone kind of experience will continue to attract a certain type of advertiser and consumer. Even though that mass-market approach cannot appeal to everyone, let's acknowledge its place on the Internet."

In other words, while portals may not be cool, they often nourish, and so — at least in the near future — they will continue to flourish.

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Source: eMarketer