Yahoo estimates it will get 20% of its search traffic from mobile devices before the end of 2012, according to Shashi Seth, Yahoo Connections SVP. That insight was gleaned during an analyst call about the company's browser, Axis, released last week for smartphones and tablets, along with a plug-in for desktops.
Since October or November 2012, Yahoo's growth in mobile on search for smartphones continues to outpace the same on desktop -- sometimes between 30% and 40%, sequentially. Seth expects Axis to continue that pace.
Seth said Yahoo will leverage its 700 million users to gain distribution across devices. While adding a search engine to a browser minimizes the steps that consumers take to find information, there were challenges to developing a browser that would run on iOS and Android devices.
Talks with Apple during the past two years ended with feedback for developing a better Axis product for the iOS devices, according to Seth. Apparently, they didn't have opposition in creating a browser that would compete directly with Safari. "We use the same rendering engine that mobile Safari uses," he said, adding that Yahoo doesn't have the same capability to turn it into a default iOS browser.
Yahoo also has been working with Microsoft to make sure the same monetization for desktop search -- higher revenue per search share -- moves to mobile devices. Seth said the companies have made "significant progress" in the past eight months, but still have lots of work to do to improve RPS on mobile.
Seth admits that a full desktop browser, rather than a plug-in, wasn't a strategy when he began this project, but "we're thinking about it," he said. "We don't have a clear answer, but do have time to think about it and make sure investments are well covered. In the next month or two we should have a clear answer."
No doubt Yahoo will gain in display ad sales if it can generate high distribution rates for Axis. Earlier this month, Macquarie Securities Analyst Ben Schachter published a research note analyzing display advertising sales across the home pages of several Internet companies. Yahoo's year-over-year trend appears strong through the first half of Q2 2012, he wrote.
Yahoo sales of custom ad units rose slightly sequentially, but rose substantially relative to the year-ago period at "32% of total home page ads in 1H 2Q'12, vs. 28% in 1H 1Q' 12 and 8% in 1H 2Q' 11," Schachter wrote. "After rising for several quarters, we saw a slight drop-off in sell-through of the login page vs. 1H 1Q, but this is still up substantially y/y (sold 71% of days in 1H 2Q’12, vs. 77% in 1H 1Q and 40% in 1H 2Q’11). This increased sell-through is a positive, though we do caution that it remains difficult to determine the extent to which it’s being driven by discounting."