Yahoo’s Search Ad Revenue Takes A Hit

Yahoo's revenue from search ads has taken a hit in the second quarter, down by 15%.

Even as it’s in talks for Microsoft to buy its search advertising business, Yahoo revealed yesterday that its revenue was search ads had dropped by 15% in the most recent business quarter.

That was higher than the 14% fall in the company’s display ad revenue.

But company head Carol Bartz was quick to dismiss any notions that Yahoo had lost ground in search, saying that “our search volume is holding fine,” and placing blame for the revenue decline on “fewer click-throughs and fewer buyer intents.”

However, due to a one-off gain, the company met consensus earnings expectations of $141million, which is 10 cents a share, an increase of 8 per cent over the year before, according to the Financial Times. Net revenues were down by 16% overall for the second quarter, to $1.136billion.

Bartz said Yahoo plans to spend $75 million improving services, although it will lose $75 million in revenue by dumping ads she described as irrelevant and irritating to users.

In after-market trading Yahoo shares dipped 2%.