"Google needs to make that leap into display advertising," said Charlene Li, a Forrester analyst. "Right now, their advertising base is really comprised of direct marketers, not traditional brand marketers, and they really don't have the expertise and credibility that Microsoft and Yahoo and AOL have in that area."
The foray into radio advertising with the dMarc acquisition is a step in the right direction, Li said.
David Schatsky, an analyst with Jupitermedia, agreed, "It's in the very early stages, but this radio venture is a natural new marketplace for Google to apply its advertising expertise."
And in general, competition in the search-based advertising segment is heating up, and will at some point restrain the revenue growth of Google and dampen its momentum.
Yahoo, especially, is a competitor to watch in the pursuit of search advertising dollars. "Yahoo has been a strong No. 2 for Google since early 2002, and continues to improve when it comes to search and related advertising," said Kessler. In 2005, Yahoo had a "solid" year, made substantial investments in people and technology related to search, broadened its index substantially, and continued to work toward investment in an improved algorithm.
