• by April 6, 2004

Online advertising bellwether Yahoo! reports its first quarter earnings tomorrow and the Street is expecting good news.

Thomson First Call expects the Internet giant to post a quarterly profit of 11 cents a share on $497.9 million in revenue. Not surprisingly, paid search is expected to be a key driver in Yahoo!'s earnings.

Paid search has been a key focus for Yahoo! particularly since its acquisition of Overture Services late last year. I'm curious to see whether the earnings will reveal a slower growth pattern for paid search. I sense slower growth coming. The search waters are roiling as key players rejigger pricing, introduce new programs, market consolidation continues, and specialized, vertical niche segments emerge.

Apart from the revenue picture for paid search, the display advertising business at Yahoo! will also be under a microscope. I'm assuming it's going to be relatively healthy and trending upward.

But there are two things that I am even more curious about--data on Yahoo!'s premium services (how quickly are they growing, numbers of subscribers, projections for subscribers), and what, if anything execs will say about the company's new brand campaign. Yahoo! has always been fiscally conservative on the ad spending front. Many of its promotional efforts are conceived in-house. With the launch of a major brand effort this week, I think things are changing.

Last summer, Cammie Dunaway, the company's incoming chief marketing officer, indicated during an interview that the brand's marketing budget would surge north of $100 million. And that's just for the U.S. If media and marketing expenses head in that direction, we can count on Yahoo! creating the ultimate Internet power brand. I'm really curious as to how the new campaign will be deployed globally.

On a downbeat note, the online diet company eDiets.com Inc. today said quarterly revenue and net loss would miss earlier expectations due to advertising pressures. Shares of eDiets tumbled more than 20 percent today.

What a shame. With so many Americans growing larger by the day, it's unfortunate that such sites are experiencing weakness. The company's CEO blamed the situation on increased competition in the online ad market.