Bronte Media

Yahoo had another fantastic quarter [PDF]. No doubt about it. But an interesting sore point was their unwillingness to comment on the drivers of search, which was up a lot overall year over year and even sequentially, which is tough to do in any kind of advertising.

Yahoo preferred instead to talk about client budgets and search. That really means two things. 1) There are new (mainly international) advertisers coming on board who spend less. 2) Overall pricing is a metric that gets thrown around wildly depending on what categories of keywords are important in the quarter (i.e. Retail in Q4).

International advertisers are causing a surge in volume of paid search referrals but they tend to pay less because they don’t know how to value search leads as well as American search advertisers. They soon will as they get smarter about their spending.

If you look at Yahoo’s growth, its domestic business added $220m in revenue year over year and its international business added $196m over the same period. That means about half of Yahoo’s incremental growth is international and half in the US.

While this is a great thing (as international markets will invariably develop like the US and the pricing levels and sophistication will rise), it makes for a tough story to tell at the moment.

International revenues are currently so important to the rise of both Google and Yahoo that they are bringing down the pricing averages for search and indeed even the average amount spent per advertiser.

Let’s hope that "analysts" like Jordan Rohan can understand trends like these.  Sadly, he wasn’t able to in recent times.