Yahoo search ads grew in quarter vs. Google: report

SAN FRANCISCO (Reuters) - New industry data out on Tuesday showed Yahoo Inc may have started gaining share in the Web search ad market against Google Inc even as Google’s share of search audience inched up.

Pedestrians walk past the Time Square Yahoo sign in New York April 7, 2008. REUTERS/Joshua Lott

One study by RBC Capital using data on ad-buying trends from Web search marketing firm SearchIgnite shows Yahoo outpacing Google in spending on search advertising, ad viewership and click-through rates during the first quarter.

Meanwhile, a report from research firm comScore showed Google gaining share against Yahoo in the overall Web search market in March, but gave no insight into how Google was doing converting Web searchers into ad viewers.

Yahoo’s first-quarter share of search spending by selected advertisers rose to 23 percent of the market, up from historic levels of 18 percent to 19 percent, SearchIgnite said.

Google’s dominant search advertising share dipped to 71.1 percent from 74.9 percent the previous quarter, it said.

“Yahoo increased its share of wallet meaningfully for the first time in several quarters,” RBC analyst Ross Sandler said in a note to investors, referring to the SearchIgnite data.

Shares of Yahoo gained 36 cents, or 1.3 percent, to $28.16. Google dipped $1.15 to $450.51.

Google is set to report quarterly results on Thursday as investors debate whether the company’s explosive growth in search advertising has begun being hobbled by a slowing economy. Yahoo reports quarterly results next Tuesday.

Yahoo is conducting a two-week test of whether to use Google’s system to sell Web search ads instead of its own. Yahoo has been seeking partners to help it fend off a takeover by Microsoft Corp, or at least force a higher bid.


Collectively, the reports paint a mixed picture of how well the Web search business is holding up in the face of weakening U.S. economic trends. Because both reports offer only a partial glimpse of aspects of the market, analysts cautioned against using the data to predict revenue trends for Google or Yahoo.

SearchIgnite places search advertising using Google, Yahoo, Microsoft and other search ad systems on behalf of buyers in retail, financial services and other industries. As such, the study does not necessarily capture overall market trends.

ComScore data for March shows Google gaining ground against it top U.S. rivals, continuing a roughly two-year-old trend. Its share of search results rose to 59.8 percent, up 0.6 of a percentage point over February, comScore said on Tuesday.

Yahoo’s share fell by 0.3 of a point to 21.3 percent in March versus February. Microsoft dipped 0.2 percent to 9.4 percent in March; Time Warner Inc’s AOL slipped 0.4 percent to 4.8 percent while Ask rose 0.1 percent to 4.7 percent.

SearchIgnite showed Yahoo had percentage increases in year-over-year spending, audience impressions and click-through rates versus Google. But this partly reflected an easy comparison to a weak 2007 first quarter, when Yahoo delayed introduction of its long-awaited Panama search ad system.

Citigroup said comScore data shows overall U.S. search market activity grew 18 percent in March, recovering from a weak February, when the market grew 15 percent. The same data showed 27 percent growth in the U.S. search market in the middle of 2007, Citi analyst Mark Mahaney wrote to investors.

“(The Law of) Large Numbers and PC Search maturity are primary factors, we believe,” he said in a research note.

Editing by Braden Reddall