Yahoo Is Doing Better In Search Than Display

Chris CrumMarketing & Advertising1 Comment

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Yahoo came out swinging with its third quarter earnings report and conference call on Tuesday, posting solid results ahead of analysts' estimates. One particularly noteworthy takeaway was that the company's search advertising business brought in more money than its display business. This is the first time this has happened since Marissa Mayer took over as CEO.

Search revenue excluding traffic acquisition costs was $450 million, up 6%. Paid clicks were flat year-over-year, but price per click increased about 17%.

"This quarter represents our 11th quarter of search revenue growth year-over-year on a revenue ex-TAC basis," Mayer said during the company's earnings call. "Our price-per-click is up in almost all regions as we continue to find ways to enhance the performance of our search ads through better user interfaces and higher quality traffic and as advertisers ultimately find our search ads more valuable."

Display revenue excluding traffic acquisition costs was $396 million, down 6%. The number of ads sold did increase about 24%, but price-per-ad decreased about 24% at the same time.

Meanwhile, Yahoo's native ads have experienced triple-digit year-over-year growth.

During the Q&A portion of the call, Yahoo was asked how search compares to display specifically on mobile.

CFO Kenneth Goldman responded, "The search is somewhat higher than display. We don't give the exact breakout, maybe we'll in the future. But in search it's also growing a little bit faster as well than display year-over-year."

Mayer said, "When we think about what will search look like, on a phone, on a smaller device 10 years from now, we think it looks pretty different then it looks today. We really like the Aviate technology that we acquired we've been looking at how can really enrich the experience such that its not a lot of different answers perfectly ranked but actually the one answer you need when you're on the go, or you're working in a more constrained display, real constrained screening environment."

More on the Aviate acquisition here.

Mayer was also asked about its relationship with MIicrosoft in terms of whether it's wrong to think of Yahoo as a distributor of Microsoft search. She basically sidestepped that one. It's no secret that she'd not a fan of the arrangement.

The subject came up again later in the call, and she offered, "I think on a whole we’re very bullish on search. It’s always been part of the Yahoo! We like where it’s going in future of mobile. We think it’s a right area for innovation and is an area that we have been investing in. We are coming to the mid-point of the ten-year agreement and we may want to contemplate changes on both sides. So Microsoft has some right to that point so do we. And we are working through this with Microsoft."

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Chris Crum

Chris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.

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