Yahoo Loses Market Share, Will New Search Feature Help?


eMarketer released search forecasts on Wednesday suggesting it could take more than innovation at Yahoo to gain back any market share lost to Microsoft Bing and Google in the past few years. Some believe that Yahoo's newly announced feature, Search Direct, could drive up bid prices for keywords on the site.

For those not following releases, Yahoo has unveiled Search Direct, a feature it will integrate into select Yahoo sites, giving searchers answers to questions and lists of trending topics as queries are typed. The feature rolls out in the U.S. first, and later this year, internationally.



Not many advertising and marketing execs think Yahoo's new feature will have a positive impact on the company's search market share. "Yahoo sold itself to the devil when it allowed Bing to power the back-end of their search engine," says Jason Hennessey, CEO at SEO agency Everspark Interactive. "In 2009, Yahoo had a 29% market share, and Google a 63% market share. In the past two years, Google has continued to innovate in local search, whereas Yahoo essentially gave up."

The decline, however, might have more to do with marketing and timing of product releases and less with the technology Yahoo delivers on. Yahoo's search engine is fast becoming a distant third in market share, according to David Hallerman, eMarketer principal analyst. He points to Bing's rise in market share as one factor among several that have contributed to Yahoo's decline.

"Yahoo has experienced a downhill side of revenue during the last few years," Hallerman says. "Even if Yahoo's year-over-year revenue turns around and becomes flat for a few years, the company will still lose market share compared with the entire market."

Yahoo's share of the $12.37 billion U.S. search advertising market fell from 13.7% in 2009 to 10.4% in 2010, according to eMarketer. This year, the analyst firm estimates Yahoo's share of overall U.S. search ad revenue should fall further to 8.1%.

But could the new format force keyword bid prices to rise if Yahoo allows advertisers to sponsor paid links in the initial search results? One feature related to Yahoo Direct could prompt an uptick in keyword bid prices. Hallerman points to the limited number of organic or paid results that serve up when queries are typed in the box without clicking on the search button. If those become sponsored lists based on keyword bids, it could increase prices.

Taking into consideration that eMarketer numbers were compiled prior to Yahoo releasing Search Direct, Hallerman says "search engines are slow-turning vessels." His point: people don't typically jump from one search engine to another quickly.

Marketers are attracted to volume when it comes to bidding on paid-search ads, so consumers would need to begin using Yahoo search for market share to change. "The new format might suggest, if a brand doesn't appear in the top three results you might as well forget it," Hallerman says.

Experian Hitwise also published a Web page listing the top 20 Web sites driving search. Facebook ranked No. 1 with 10.52% of searches ranked by visits for the week ending March 19, 2011, followed by Google with 7.74%; YouTube, 3.27%; Yahoo Mail, 3.10%; Yahoo, 2.53%; Bing, 1.57%; and Yahoo Search, 1.43%.

Experian Hitwise also ranks as the No. 2 search engine in the "All Categories," ranked by Volume of Searches during the same four weeks.


1 comment about "Yahoo Loses Market Share, Will New Search Feature Help?".
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  1. Chris Nielsen from Domain Incubation, March 25, 2011 at 10:02 a.m.

    Great article that echos what I have been saying not since Yahoo allowed MS to take them over, but even before with their "pre-pay" policy for advertisers and what appeared to be massive click fraud on their network.

    If yahoo results = Bing results, which are you going to use? Shiny take-a-lession-from-Ask Bing, or faithful, but tired and worn out old Yahoo?

    The addition of Yahoo properties at MS has been good for advertisers, but the fraud levels require that your exclude the entire content network. The net result seems to be somewhat positive.

    The question that I cannot find an answer to is What Will Happen To Yahoo? Will they:

    a) Wake up and take back their soul before being cast into the bottomless pit or web history?

    b) Will MS suck them dry and leave them to limp along providing email and other services?

    c) Will Google or someone else (not MS) buy them and administer a cure to the self-destructive spiral they are in?

    I'm hoping for c) since DMOZ seems to be floundering and we need at least one good massive directory out there. It would be such a shame for Yahoo meet the same triple "E" fate as Netscape and others.

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