Study: Yahoo Increased Share of Search-Ad Market in Third Quarter

SearchIgnite Reports Company Gained 2% -- but It Still Lags Far Behind Google

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NEW YORK (AdAge.com) -- The day before Yahoo announces its third-quarter earnings, one study has a bit of good news for the portal's search platform, launched last spring and coined Panama.

Yahoo may be gaining ground on its chief rival Google -- at least in terms of search-marketing dollars spent. According to a quarterly report from RBC and SearchIgnite, a search-marketing-technology firm whose platform manages more than $200 million a year in search media dollars, Yahoo's share of marketer dollars increased from 18.5% to 20.4% from the second to third quarter. (All figures in the report were based on spending on SearchIgnite's platform.)

It should be noted that despite Yahoo's gains, Google is still the giant: It has 73% market share in terms of search media dollars, among SearchIgnite clients.

'A big deal'
"Two percentage points on 18 is a big deal," Roger Barnette, president of SearchIgnite, said of Yahoo's gains. At SearchIgnite, overall search spend from second quarter and third quarter increased 1.8%. "Almost all of that incremental increase went into Yahoo, not Google," he said. "They are not necessarily taking money out of Google, but they have more money to spend and they appear to have decided to put that in Yahoo thinking it might be more profitable."

Why might all this be? After all, three months ago SearchIgnite's quarterly report suggested Panama's returns might be leveling off.

Mr. Barnette suggested Yahoo may be getting better at "moving the levers" to increase its search-marketing returns. Prior to Panama, Yahoo had little flexibility in how it could massage and tweak its search platform to milk a greater return out of every marketing dollar.

Perhaps more importantly, he said, it appears Yahoo was able to take advantage of a seasonal trend that is emerging at Google. In April, Google had 67.1% of search ad impressions. That number dropped to 54.5% in July. In September it was back up to 63.2%. He said he hasn't seen a seasonal trend this dramatic before and suggests it's only becoming visible as Google nears full penetration.

Growth had masked trends
"Google has been gaining market share historically that may have masked any seasonal trends you might have otherwise seen," he said. "Market-share growth has slowed to the point where you can see some seasonal trends." Yahoo's user base didn't appear to shy away in summer where Google's did.

The good news for Yahoo, despite the fact Google's share of search impressions is now back up, is that Yahoo was able to take advantage of its competitor's weakness. Mr. Barnette suggests that the fourth quarter will see more dramatic increases in budget. The question is, Will that money flow into Yahoo at similar increased rates?

While that remains to be seen, "marketers are willing to pay more for a click on Yahoo because they're finding quality is improving," Mr. Barnette said. "We think numbers trend very well."
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