Searching for more: Innovation is the key in this fast-growing, highly concentrated industry
London, United Kingdom (PRWEB) June 13, 2013
The Search Engines industry is the perfect example of a concentrated market structure, since just three companies control almost the whole industry and the largest dominates with a 90% market share. Industry operators provide web portals that generate and maintain extensive databases of internet addresses. Industry participants generate the majority, if not all, their revenue from advertising. The technological revolution, which has seen more of the UK public connected to the internet, and a boom in e-commerce has made the industry one of the most innovative and successful.
According to IBISWorld industry analyst Temitope Onabanjo, “the success of the industry is largely based on the ability of industry giants to offer efficient and cost-effective advertising methods”. Over the five years through 2013-14, industry revenue is anticipated to increase at a compound annual rate of 8.3% to £903.9 million. Despite the UK economy plunging into a deep recessionary trough that crippled multiple industries, the Search Engines industry has remained resilient, only dipping slightly in 2008-09, when advertising agents and businesses scaled back their advertising budgets. The industry quickly bounced back and is expected to continue on its upward trajectory, growing by an estimated 5.4% in 2013-14.
Looking ahead, there are a number of opportunities that will help the industry continue expanding. Onabanjo adds, “technological advancements that incorporate social media and online consumer behaviour into search technology are anticipated to make it easier to tailor advertisements more closely”. Furthermore, the proliferation of mobile technology and devices presents a fast-growing market for operators. However, these opportunities may also threaten the pace of the industry's growth; advertisements that appear on mobile devices are less expensive and could tempt clients away from services that are more lucrative for operators. Social media remains a strong competitive threat as an alternative location for advertisements. The industry is not expected to grow as fast as it has done previously as the novelty of the service wears off, but growth is still projected to be solid over the five years through 2018-19.
The Search Engines industry exhibits a high level of market share concentration. The three largest enterprises, Google, Microsoft and Yahoo!, control 98.6% of the search traffic in the UK and a search by a user is almost always done using one of the three sites. Google in particular has consistently dominated the industry maintaining its 90% market share for much of the past five years. Enterprises in the industry rely on advertising revenue for income, and thus they are heavily reliant on users for attracting advertisers to their search engines. Because of this, search market share is often synonymous with revenue market share. The more traffic levels a website can attract, the greater the demand for ad space.
For more information on the Search Engines industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
This industry covers the operation of search engines and other websites that act as portals to the internet. Typically these platforms allow users to search through and filter the information available on the internet. Firms generate revenue by selling advertising space or sponsoring search results presented to portal users.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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