Yahoo’s Display Takings Up 19 Percent in Q2

Yahoo this afternoon announced earnings of $213 million for the three months ending June 2010, representing a 51 percent increase in net income versus the same period last year. In terms of revenue the company took $1.6 billion during the quarter, representing a slight increase of 2 percent versus Q2 2009.

The firm said a 19 percent increase in display ad revenue from its owned and operated sites and a 7 percent increase from marketing services revenue on third-party sites contributed to its growth, although an 8 percent drop in search ad sales offset that increase.

Though the results fell short of some analyst’s expectations, Yahoo CEO Carol Bartz said, “We’re pleased that revenue grew, display growth is strong, and that search is stabilizing,” on an earnings call today. Explaining why the company hit the low end of its revenue estimates she added, “We gained search share in the quarter but didn’t monetize it as well as we expected… In the display market we saw demand slow down in the second week of June as key customers pulled back… Our customers are doing wise expense management and marketing is one of those areas that’s easy to dial on and off. “

Bartz pinpointed its acquisition of Associated Content and its integration of social platforms such as Facebook as some of the highlights of its quarter. She also described the firm’s continued strategy of focusing on four distinct areas of its business, including video, social, mobile, and local.

In reference to search, Bartz said the company “remains focused on growing its business,” and pointed to comScore numbers suggesting it has grown search market share over the past two months, thanks partly to the introduction of contextual search links placed on its content properties. She added that the company remained “laser focused” on its partnership with Microsoft, and that the company has trained up 600 new sales and account management staff in preparation for the transition to Microsoft’s back-end search technology.

Last week, Yahoo announced it is on track to make that switch for its organic search results in the U.S. and Canada from August, and that it hoped to transition its paid search ads by late October. However, speaking to ClickZ News, Betty Stooksberry, senior director of the search alliance at Yahoo, said the switch would only be made if the company felt it was fully prepared. “There’s still a significant amount of work in front of us. We evaluate the progress we’re making every day, and if we feel it will improve the overall experience we’ll delay it until after the holiday period,” she said.

Whether the switch occurs this year or next, Stooksbury said the company has already embarked on the process of preparing its premium advertisers and agencies, providing them with detailed information on the differences between its existing search marketing platform and Microsoft’s AdCenter via in-person meetings and conference calls.

Stooksberry added Yahoo teams will begin taking an active role in servicing Microsoft’s existing customer base once the ad serving transition is complete, a role it is obliged to play under the terms of its agreement with Microsoft.

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