Yahoo!’s Results: 3 Points and 5 Trends

There are at least 3 points to consider about Yahoo!, which released its full year 2009 revenues on January 26th.

1) Compared with search advertising revenues, display advertising is becoming more important than ever to Yahoo! (which just reinforces the necessity of the Bing deal with Microsoft).

2) Yahoo!’s Q4 results indicate that brand spending is slowly coming back overall, not just for that company but in the overall US online ad market.

3) Back to search: Google is continuing to eat not only Yahoo!’s lunch, but its breakfast as well.

The backstory for those 3 points can be fleshed out by these 5 related spending trends, all US market only (which made up 73% of the company’s 2009 revenues):

* Trend #1. After 2009′s first three quarters, when net display ad revenues on the Yahoo! portal fell by 8.7%, the year-over-year drop in Q4 was only 4.6%.

* Trend #2. More so, after net display revenue had a horrible sequential Q1 (down 25.6%) and two flat quarters in Q2 and Q3, the quarter-over-quarter growth in Q4 shot up by 23.5%.

Those two display spending trends are significant not just for Yahoo! alone. Even though the portal’s share of total US display ad spending (banners, rich media and video ads) was only 17% in 2009, that represents the single biggest share among all Web publishers.

And as brand advertisers get more sophisticated about online advertising, most are not putting all their money on one Website. In fact, then, that makes results at Yahoo! less of a one-off, a singular sensation, but more indicative of overall market trends.

* Trend #3. Meanwhile, while Yahoo!’s search revenues in 2009′s first three quarters fell by a not insubstantial 9.4% (year-over-year), they plummeted off the cliff in Q4 – even with the benefit of holiday shopping – down by 18.6%.

* Trend #4. In contrast, Google’s net US ad revenues – still at least 95% from search – were up by 10.9% in Q4.

That 29.5-point differential between Yahoo!’s loss and Google’s gain only partially reflects the balance of search queries. While Internet users entered 66% of the December 2009 US queries at the top five search engines at Google, according to comScore data, they entered 17% on Yahoo!. Bottom line here: Google makes more money from each search query, on average, than does Yahoo!.

* Trend #5. Or look at the numbers another way: In 2009′s US search advertising market, 70% of the $10.8 billion dollars came through Google while only 10% were from Yahoo!’s owned and operated search engine. Lunch and breakfast.