Twitter Poised To Surpass Yahoo In U.S. Display Ad Revenue

According to a report by online research firm eMarketer, Twitter is poised to take Yahoo’s place as the third-largest seller of online display advertising in the U.S. for the first time this year. While Twitter and Facebook are expected to experience growth, Google and Yahoo are expected to see a decrease in their shares.

The research firm predicts that Twitter will claim 5 percent of the U.S. display ad market this year, up from 3.7 percent last year. According to the report, Twitter will remain behind Facebook, with a 25.2 percent share, and Google with 13 percent of the market. Although Yahoo has been the third-largest display ad seller for the past four years, eMarketer predicts that it will fall to fourth this year as its share slips to 4.6 percent of the total, marking a decline from 5.5 percent in 2014.

In the long term, eMarketer predicts Facebook’s revenue share will reach 26.9 percent in 2017, with Twitter’s share expected to reach 6.8 percent in 2017. Conversely, by the same year, the research firm predicts that Google’s display revenue share will decline to 11.1 percent, with Yahoo’s share falling to 3.5 percent by 2017.

The rankings of the top online ad companies is shifting as an increased percentage of marketing dollars are being spent on mobile. Twitter has outpaced Yahoo in its move to mobile, with 88 percent of its $432 million in ad revenue coming from mobile in the fourth quarter of last year. For Yahoo, mobile ads accounted for only approximately 20 percent of the company’s $1.25 billion in revenue in the same period.

Twitter’s rise reflects Chief Executive Dick Costolo’s approach to show ads to more users. The company has not only increased the amount of ads that are being shown to users, but Twitter is also exploring ways to serve ads outside of Twitter through partnerships with third-party publishers. “They are starting to move into trying to catch ad revenue from a broader base,” explained Martin Utreras, senior forecasting analyst at eMarketer.

It’s clear that both Twitter and Facebook have also benefited from the recent growth in app-install ads, where marketers pay for each time a user downloads a smartphone app. In a recently released study, eMarketer said that this relatively new ad type will generate $3 billion in the U.S. this year, thereby accounting for 10 percent of all mobile ads.

Despite a recent push into mobile ads, Yahoo is struggling to keep up with rivals in its core business of display ads. The company ranked first in U.S. display ads up until 2011, when Google and Facebook both surpassed it in the same year.

For both Facebook and Twitter, gains in the digital display market are driven by mobile advertising. According to eMarketer, mobile will surpass desktop in display ad spending in the U.S. for the first time this year, increasing from $9.65 billion in 2014 to $14.67 billion in 2015. Meanwhile, desktop display ad spend will fall to $12.38 billion in 2015, from $12.56 billion last year.