Yahoo! Clicks Ahead of Rivals

Yahoo!'s search advertising business grew faster in the first quarter than Google or Microsoft.
By TSC Staff ,

Yahoo!

(YHOO)

outpaced

Google

(GOOG) - Get Report

and

Microsoft

(MSFT) - Get Report

in search advertising spending in the first quarter.

The Internet giant, which is the throes of a takeover battle with Microsoft, showed its worth when it posted a 57.6% growth in search ad spending in the first quarter compared to a year ago, according a study released Tuesday by SearchIgnite, a paid search management technology solutions firm.

That growth helped Yahoo! boost its marketshare of search ad spending to 24.2% from 19.6% in the first quarter compared to the same period a year ago. By contrast, Google's share of the market fell to 70.4% from 74.5%, and Microsoft's share fell to 5.45% from 5.9%.

Overall, search ad spending was up 28.5 percent in the first quarter but SearchIgnite noted that spending could slow in the second quarter.

SearchIgnite also cautioned that Yahoo!'s strong first-quarter growth was based on a rough quarter a year ago when it was having problems with Project Panama, its platform to distribute online ads.

The potential for search ad spending growth is a key reason for Microsoft's unrelenting drive to acquire Yahoo! The Internet giant has rebuffed Microsoft's $31-a-share, as it seeks other options, including talks about a deal with

Time Warner's

(TWX)

AOL.

According to SearchIgnite, Yahoo! posted gains in search ad spending of 79.2% in January, 37.3% in February and 43.9% in March.

SearchIgnite's results follows a report late last month from research firm comScore that reported a 5% increase in ad-supported clicks for Yahoo! in February compared with only a 3% increase for Google and a 13% decline for Microsoft's MSN paid clicks.

All three companies are reporting their earnings in the coming week: Google on Thursday, Yahoo! on April 22 and Microsoft on April 24.

Yahoo! shares were up 37 cents, or $1.33, to $28.17 in late afternoon trading. Microsoft was up 23 cents, or 0.82%, to $28.29, and Google was off $3.66, or 0.81%, to $448.

This article was written by a staff member of TheStreet.com.

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