US mobile ad spending is expected to break the $1 billion mark this year, up 48% from $743.1 million in 2010, according to eMarketer. eMarketer’s estimates include display (banner, rich media and video), search and messaging-based advertising.

A complete report, ‘Mobile Advertising and Marketing: Past the Tipping Point,’ is available to eMarketer Total Access clients. Click here to learn more.

The key indicator in Yahoo!’s Q1 earnings call yesterday is not that the company’s profit rose from 8 cents to 22 cents per share, a 175% leap in earnings. While that news is certainly critical for the stock market, it’s far less so for the US online ad market.

When you dig into the numbers, several crucial elements say that Yahoo!’s results signify slow, but significant growth for US Internet advertising.

• Net US ad revenues of over $750 million represented a drop of only 4.5%, year-over-year. When you consider that all four quarters in 2009 delivered double-digit losses, this is a key improvement.
• Display advertising, which contributed 41.5% to Yahoo!’s total Q1 net US revenues, was up by 11.7%. That gain is due to continued expansion of brand advertising on the Web, which often looks for the scale and reach that the Yahoo! portal still provides.
• Paid search advertising, however—which made up 32.1% of the company’s net US ad revenues—fell by 19.8%. However, the light at the end of this dark tunnel was shed by the initial gains from the search deal with Microsoft, which netted Yahoo! $78 million worldwide in Q1.
• The Yahoo! ad network also showed a sharp turnaround, with its US net revenues up by 4.9% in Q1, compared with a 4.2% loss in the previous quarter. The spending increase from affiliate sites is one sign of an influx of ads beyond the Yahoo! portal, across the larger Web.

Overall, Yahoo!’s US net revenues in Q1 show the portal on track for eMarketer’s projection of minus 2.9% growth in 2010.

However, especially if more brand marketers look to further expand their reach online—to support their social media marketing efforts, for example—it’s still possible that Yahoo! could show positive revenue gains this year.

Google’s earnings in Q4 and in all of 2009 were strong, but that might be more a case of Google’s strengths than the online space as a whole. Here’s why.

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