Yahoo's quarterly results today confirmed the conventional wisdom that search advertising will fare better than display ads in the downturn, as advertisers seek more immediately measurable results. Display advertising revenue on Yahoo sites fell 13 percent for the quarter, compared with a 3 percent decline in search ad revenue, the company said as it reported a 78 percent plunge in Q109 profits.
Google, which makes money primarily from search ads, saw its Q109 advertising revenue increase by 5 percent, to more than $5.3 billion, compared to the same period the previous year. Still, that compared to a 40 percent increase in Google ad revenues from Q107 to Q108, so it's clear that the search ad business isn't immune to the effects of the economy.
At $664 million for the December quarter, Microsoft's advertising revenue pales in comparison -- not making up a huge portion of its business. But the trend will still be interesting to watch when the Redmond company reports earnings Thursday afternoon.
It's not clear how much the difficult market for display ads will factor into discussions reportedly taking place between Yahoo and Microsoft. Under one possible scenario, Microsoft would handle search ads for both, and Yahoo would handle display ads. Yahoo CEO Carol Bartz declined to comment about the possibility of a Microsoft deal during the company's quarterly conference call this afternoon.
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