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Advertising Spending on Yahoo! Is Back in Black

Overall search and display markets still growing faster

Is Yahoo! turning the corner? eMarketer has raised its forecast for net US revenues at Yahoo! for the first time in more than a year, as signals suggest advertisers will increase spending with the company for the second year in a row—though only just.

Last year, Yahoo! saw net US ad revenues grow for the first time in several years—to $3.18 billion—and eMarketer now estimates the company will see further growth of 3.2% to $3.28 billion in 2013.

The revised figures come after Yahoo!’s search revenues came in far higher than expected in Q4—a sign that management restructuring and investment may continue to propel search revenues higher than previously estimated.

eMarketer now estimates net US search ad revenues at Yahoo! will grow 7% to $1.23 billion this year, up from $1.15 billion in 2012. eMarketer previously forecast that net US search revenues at Yahoo! would reach just $1.16 billion this year.

The company's restructuring efforts and cuts to various product groups also appear to have affected display revenues. As a result, eMarketer has revised net display revenue projections slightly downward to reflect lower inventory levels and short-term revenue losses.

However, eMarketer—which forms its forecast for online ad revenues and market share through an analysis of multiple sources, including reported revenues from major digital ad-selling companies; estimates from other research firms; consumer internet usage trends; and interviews with executives at ad agencies, brands, digital ad publishers and other industry leaders—remains bullish about Yahoo!’s display business, and expects growth in 2013 and 2014 as the company removes clutter and increases prices with higher-quality inventory.

eMarketer forecast in September 2012 that Yahoo!’s net US ad revenues would grow 1.9% in 2012 and 2.2% in 2013. The March 2013 forecast raises the growth forecast to 3.2% for 2012. The projection for growth in 2013 is also 3.2%, 1 percentage point higher than the previous growth forecast.

Despite increased spending by advertisers, display revenues at the company are still growing far slower than the overall US market, where competitors like Google and Facebook continue to stretch their lead.

Similarly, despite search growth, eMarketer estimates Yahoo! will continue to lose share of net US search ad revenues, dropping to 6.2% this year from 6.5% in 2012, as both Google and Microsoft make gains. eMarketer estimates that Google's share of net US search ad revenues will reach 73.7% this year, up from 72.8% in 2012.

There is some good news for Microsoft. Google’s 2013 growth in share comes after a loss in 2012—the first time the search giant has ever decreased its share of US net search ad revenues. eMarketer estimates Google's share of search ad revenues dropped to 72.8% in 2012 from 74% in 2011. Meanwhile, Microsoft and Yahoo!’s combined share of the market grew to 14.5% in 2012 from 14%.

This year, Google is projected to see its share of US search ad revenues grow again as the overall US search market increases 12.4% to $19.8 billion.


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