Yahoo! reports online advertising boom

By Kelly Ellis

Posted on 19 Oct 2005 at 16:10

Yahoo has reported record third-quarter revenues, with a growth in online advertising of 46 per cent from last year.

The Internet giant's financial results beat Wall Street analysts' estimates by $14 million dollars, giving the company a revenue of $932 million. Their predictions were based on revenue after the deduction of fees to sites like Microsoft's MSN that display Yahoo's search ads.

Yahoo reported a total revenue of $1.33 billion, up 47 per cent for the year, however, its performance in the Web search market is still trailing behind Google, the New York Times reports.

Safa Rashtchy, an analyst with Piper Jaffray, told the newspaper that he estimates Yahoo's search ad revenue to be $442 million for the third quarter, up 43 per cent from last year, and he predicts that Google's, which is almost completely made up from search ads, will be $956 million - up a whopping 90 per cent.

However, Yahoo! chiefs are pleased with the results and say that they prove the company is on the ball.

'Our ongoing ability to execute against plan and utilize our industry-leading technology continues to position us for long-term growth,' said Terry Semel, chairman and chief executive officer of Yahoo,'[This] enables us to provide our users with the best content and most relevant online experience.'

Yahoo has undertaken a number of initiatives to increase revenue, particularly from fees, including services like music downloads as well as payments from ISPs that offer Yahoo services to their customers.

However, last month Yahoo!'s future in search ads was called into question as the end of a marketing contract between the company and MSN draws closer. Although, industry experts now predict that MSN will not drop Yahoo as a partner, which could spell even greater success for the company.

For full details of the financial report click here.