Yahoo’s market share has been somewhat volatile recently, andaccording to some experts a continuing decline is to be expected, particularly if some reports from the Dow Jones are to be believed. According to a report by the Web Street Journal Yahoo’s share may decline by around another 3% and lose around 12-18% of its current search volume. Much of this can be attributed to the loss of partnership deals with major computer hardware manufacturers such as HP and Acer.

A secondary impact of the loss of such deals is probably more notable, particularly when you consider the lack of ‘competition’ in the sector. Lose Yahoo and you only really have  a choice of three – in realistic terms two search engines to choose from namely MSN and Google. Given Google’s dominance in the market, I would suggest there is only one suitable competitor and that competitor happens to be your nearest rival in terms of market share.

It is indeed further noticeable that Microsoft have indeed been quick to exploit these opportunities. Partnerships with HP (replacing previous engine of choice Yahoo) and Dell will have given Microsoft some added impetus – and the potential to immediately target around 55% of PC shipments in the US. With Google continuing to dominate the search landscape it is increasingly becoming a race for second place, something neither engine has managed to make a clear move on.

Yahoo have been quick to suggest that the loss of such parternships shouldn’t affect market share as much as the above report would have us believe suggesting “consumers will continue to use Yahoo search even if they buy a new computer pre-loaded with a rival’s toolbar.”. I personally would suggest the only engine that could guarantee that level of loyalty would be Google, and that taking that for granted in the current climate is possibly a bit foolhardy – particularly given the apparant focus on search from Microsoft, and even the rise of channels such as Twitter as a search engine of sorts.

Whilst the US search engine market is very different to that of the UK, the share of Google being far higher in the UK, I would suggest this could still have some significant knock on effects. With Google still taking nothing for granted, in a continual drive towards further relevance (and lets face it increased revenues), the other two need to continue to be innovative in order to attract both advertisers and searchers alike to utilise them more. Lets be brutal both of them could do no worse by starting at:

• Looking further afield. The world doesn’t end at the US, new products are generally slow at moving to foreign markets (if at all).
• Giving users value add. I am always disappointed by the relevance of a number of searchers on both engines – and whilst I personally use them more than most – it comes through a requirement of considerable data mining more than anything
• Giving advertisers value add. In my opinion natural search battles is continually ongoing. Monetising and ‘Management’ or organic search and digital asset value adds would seem to be natural progression
• Hitting new channels hard. Google in particular seem to be pushing mobile hard. The other two need to be hitting this – harder!!

Search engines can’t take anything for granted. Lets just take a look at Altavista. They have to continue to evolve – otherwise things can change and change very quickly. I personally would expect a very different landscape in 5-10 years, but I guess only time will tell.

Many people expected Yahoo’s results to be low. However I would suggest the figures announced beat even the some pessimists forecasts and expectations: A couple of the ‘highlights’ from their financial results included:

Full Year 2008 Financial Results

• Revenues for 2008 were $7,209m ( a 3 percent increase up from $6,969m in 2007)
• Marketing services revenues were $6,316m for 2008, a 4 percent increase compared to $6,088m for 2007.
  • Marketing services revenues from Owned and Operated sites came in at $4,046m for 2008, a 10% increase from $3,670m in 2007.
  • Marketing services revenues from Affiliate sites were $2,270m for 2008, down 6% compared from 2007.
• Fees revenues were $892 million for 2008, up 1% compared to 2007’s figure of $881m.
• Revenues excluding TAC were $5,399m for 2008, a 6 percent increase compared to $5,113m for 2007.
• However the biggest stand out figure was…operating income for 2008 was $13m compared to $695m for 2007.

Q4 Specific reading

• Operating loss for Q4 2008 was $278m in comparison to operating income of $191m for Q4 2007.
• Revenues were $1,806m for Q4 2008. In real terms this was a 1 percent decrease compared to $1,832m for the same period of 2007.
• United States segment revenues for the fourth quarter of 2008 were $1,338 million, a 2 percent increase compared to $1,313 million for the same period of 2007.

Source: SearchEngineLand 2009

In terms of outlook for 2009, CFO Blake Jorgensen suggested this remained uncertain as ‘Yahoo has “less visibility” than it did a year ago on the “advertiser pipeline”‘. Certainly MSN appears to have gained some traction in certain markets – primarily at the expense of Yahoo, however I would suggest much of this is down to the reduction in ‘Premium Display Advertising’ as advertisers reduce branded advertising in the current economic climate

I would suggest though it is new CEO Carol Bartz’s feedback that is particulary interesting, in particular in the fact she does not seem to be definitively saying that the search side of Yahoo will stay Yahoo. The following comments in particular may shed some light

• Am I immediately planning to sell the Search business? I didn’t come here with any preconceived ideas about what to do.
• Re integration of search and display: Search is like a house with different rooms; all of it is part of a complex that allows users to search and us to get money. Some parts of it are easy to break apart and others are not. This is an important asset for the company. It’s important for us to invest in it if we’re going to keep and get the most value for it if we’re going to sell it.
• On the Yahoo brand: Should stand for the best information site on the internet. The problem with some of the many [Yahoo] properties is that they can distract from the core products

I would suggest no body is in any doubt as to the huge job head of Carol Bartz at Yahoo. It is obvious that the continuing evolution and popularity of Google is hurting revenues (searchwise), and with potential rollouts from MSN in the pipeline there is still the considerable threat from MSN, and other potential competitors from overseas (Naver etc) . I would add this is unlikely to reduce the amount of rumour regarding Yahoo search over the coming weeks and months. Now is the time when many of the engines are innovating and rolling out new services and solutions. Whilst Yahoo have rolled out some innovative solutions, they are playing catchup to Googles considerable inventory – and I do have my doubts as to whether Yahoo’s existing inventory is in the right places to best exploit the current climate.

So where now for Yahoo? I think there is a common thought that 2009 is going to be make or break for Yahoo not just in terms of search but I would suggest Yahoo as a whole. I personally believe Yahoo have too much to make up in terms of becoming a serious competitor to Google, particularly as it currently stands, and I do believe the search product is going to have to evolve or merge in order to pose any serious short to medium term competition.

More information

• Yahoo Earnings Release
• Yahoo Q4 Shows Operating Loss; CEO Bartz: ‘This Is Not A Company That Needs To Be Pulled Apart And Left For The Chickens’

I, like many have been following the recent events in the US election, with the fight for the White House. It was therefore interesting to see the influence online has played in the campaign. Two recent articles have really struck a cord as a result.

Firstly, Sage Lewis highlighted the importance of online (and in particular Search and Social Media) played in Obamas rise to the White House. In his article, Sage mentioned a number of interesting statistics, namely:

• There are nearly 2 million links to Obama’s website, nearly twice as much as those pointing to John McCains website.
• According to statistics released by Rubicon Consulting, “Democrats are more active online than Republicans. Democrats are more likely to participate in online communities, and say they’re more heavily influenced in their voting decisions by information they find online.”
• Obama’s campaign had social media at its heart, not just in terms of the site itself, but also in terms of the personnel involved. The involvement of Facebook co-founder Chris Hughes, shows the importance of social media within the strategy.

The second article of particular interest to search was Kate Kay on Clickz. In the article, Kate highlighted that Obama’s campaign spent nearly $8 million through October to Google, Yahoo, Facebook, news Web sites, ad networks, and in-game ad firm Massive (which I talked about at the recent Interactive Marketing show in Manchester). In particular it is interesting to see where the money was spent.

• Just over $4 Million on Paid Search – roughly broken down $3.5 Million to Google, with Yahoo accounting for about an eighth of that, with $673000.
• Nearly $8 million spent on online ads.
• Interestingly, the spend on Social Media comes to the fore. Nearly three quarters of the social media budget used in September alone, with Facebook taking the lions share.
• The use of MSN owned Massive Incorporated (well worth a look) was interesting alone. The campaign placed ads pushing an early voting message in EA games, including a racing game called “Burnout Paradise,” targeting them to players in 10 battleground states.
• Ad networks were a particular focus with more than $600,000 was paid to a variety of networks throughout the year, including AOL’s Advertising.com, Collective Media, Undertone Networks, Burst Media, Quigo, DrivePM, Pulse360, Specific Media, and online video networks Broadband Enterprises and Tremor Media.
• Local online media targeting also saw significant spend with around $100000 being spent.

Politics is an area many people have an opinion about, and it is therefore suprising it is often not integral to modern day political campaigns, however it is encouraging to see more and more focus given to Online. In particular key channels such as Search (inc Online PR/Blogging), Display Online Brand Management (and monitoring in particular), should be a fundamental part of any modern day political framework.

Given the noise that has been generated on Twitter by many of my search colleagues with regards to the US Elections, it is suprising that McCains camp didn’t use online as a bigger battleground, and I personally think this is the first of a more digitally focussed policital landscape moving forward, as even we in the UK start using online as part of the political juggernaut.

I have been involved in a number of discussions as to the merits/demerits of .co.uk vs .com visibility primarily with Google. With the ongoing evolution of the algorithms, with localisation and relevancy being at the heart of it, its important to understand how this impacts on searchers. For this reason, understanding where such users are searching is very important.

Hitwise are one of the best aggregators of such data. Interestingly enough, they have recently published an overview of the leading search engines for August 2008, with the results as follows:

• Google.co.uk (Google UK) – 73.13%
• Google.com (Google Global/US) – 14.20%
• uk.search.yahoo.com (Yahoo UK) – 3.37%
• www.uk.ask.com (Ask) – 2.69%

Given many UK companies target UK customers, it is essential that your SEO strategy should at least pay reference to localisation of search. Google in particular rewards efforts to target your site to your local market by using metrics such as domain extension and hosting location to determine best fit.

If you aren’t thinking local – isn’t it about time you did.