Online ad spending continues to rise, with the IDC reporting that total US ad spending grew by almost 28% in the final quarter of 2007, compared with the same period in 2006.

In the last three months of 2007, online ad revenue reached $7.3bn, while ad revenue for the full year was $25.5bn, 27% higher than 2006.

The research also found that Google’s U.S. market share dropped for the first time in two years, due to slower sales in Q4. The search engine’s share of the US market fell by 0.5% to 23.7% in Q4 compared to Q3.

Google’s net US online ad sales grew by around 40% in the final quarter, while its year-on-year growth rate had been 50% in Q3.

According to IDC’s Karsten Weide, a Yahoo-Microsoft merger would enable the two companies to compete more effectively with Google:

“If a merger between Microsoft’s new media business and Yahoo! would come to pass, the combined entity would have a net U.S. advertising market share of about 17%. It would not quite bring Microsoft-Yahoo! to where Google is in online advertising in the U. S., but it would give them a much better fighting chance than if they went it alone.”


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