• by Wendy Davis  @wendyndavis, January 17, 2005

Yahoo! will benefit from a robust paid search advertising market and increased demand for online branding campaigns, predicted financial research firm Piper Jaffray & Co. on Friday. Based on the strength of Internet advertising at the end of last year, Piper Jaffray raised its target price for the Sunnyvale, Calif.-based Web portal company, from $38 a share to $45 a share.

"Yahoo! gained share in Q4 and is likely to be one of the biggest beneficiaries of the impressive growth in search," stated the report, by senior research analysts Safa Rashtchy and Aaron M. Kessler. "Our brand advertising checks also point to continued sold-out inventories . . . increased prices, and demand by advertisers for more inventory even at higher prices."

Piper Jaffray predicted that Yahoo!'s quarter-over-quarter search revenues for the fourth quarter would increase by 22 percent, based on its research showing that search volume increased between 10 and 15 percent, and that cost-per-click pricing increased between 15 and 20 percent. Piper Jaffray also estimated Yahoo!'s revenues from online branding ads would rise to $246 million--a 33 percent year-over-year increase from 2003.

The report also noted Yahoo!'s recent efforts to expand its content offerings. In December, Yahoo! bought exclusive rights to two animated videos created by political satirists JibJab Media, and the previous month, Yahoo! hired Lloyd Braun, a former ABC producer, to head up its entertainment division. Earlier last year, Yahoo! purchased MusicMatch, a software and music download service company, for $160 million.