Paid search pays off for Yahoo!

Paid search pays off for Yahoo!

An upturn in paid search and advertising revenue drives Yahoo! to report one of the strongest quarters in its history.

Revenues hit $758m (£412.7m) compared with expectations of just $500m, namely because the first quarter includes its acquisition of paid-for search company Overture.

Yahoo! bought Overture in a $1.6bn deal last July, in an effort to boost its presence in the increasingly lucrative search sector.

Paid-for-search works like this: Overture pays Yahoo! for displaying advertiser-sponsored search listings atop results pages. Each time someone clicks on a sponsored link featured on Yahoo!, Overture collects a fee from the advertiser behind it. The revenue is then shared with Yahoo!.

So far the web portal has benefited heartily from the deal, with nearly one fifth of its overall first-quarter revenue growing out of the partnership.

For the first quarter, Yahoo! divided revenue into three categories: marketing services, fees and listings.

Marketing services, which encompasses online advertising and the paid search deal with Overture, jumped 38% year over year to $190m.

Executives said this revenue line got a boost from Overture and also from traditional advertisers.

"Yahoo!'s performance surpassed even our high expectations," said Terry Semel, Yahoo!'s CEO.

The strong first-quarter results follow Yahoo!'s best fourth-quarter results since it launched, when revenues climbed 61% and marketing services revenues leapt 178%.

The increase in revenue is being attributed to a recovery in traditional online and web-search advertising.

The shake-out in the Internet sector seems to have even benefited companies like Yahoo because advertisers like to focus on the more popular sites. As a result Yahoo! and other Internet stocks have restored market faith, which is currently being reflected in rises in the Nasdaq technology index.

Sources: BBC Online, CNN, Revolution

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