Yahoo gets more clicks, but Google makes more money

by Sohini Bagchi    Oct 22, 2013

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For the third month in a row, Yahoo’s homepage had attracted more visitors than Google, according to a recent ComScore report on internet traffic data for September. The research firm reveals that Yahoo’s websites had 197.8 million unique US visitors last month, while Google’s had 191.4 million. This may indicate that Yahoo gets more clicks, but is it winning the larger battle? The fast growing mobile space. The answer is ‘no’ according to many who believe the comScore has looked at users visiting Yahoo’s homepage from a desktop or notebook PC, and may have  ignored people using smartphones or other mobile devices. And this is where Google has a clear advantage. It is undoubtedly making more money.

Google scores in mobile, content

Mobile internet usage in the US, India and other parts of the world is skyrocketing and it is unlikely that ComScore considers the mobile traffic, argue some analysts, who believe that Yahoo is still not known for compelling mobile apps, even though it is working in this area at present.

On the other hand, as users are increasing their web-browsing time accessing sites from mobile devices, Google through various iOS apps and the Android platform are seeing a tradeoff between traffic from desktop and mobile users. Therefore, researchers believe Yahoo is still far behind Google in making money from the new oportunities.

Research firm eMarketer estimates that Google will generate $38.83 billion in worldwide digital ad revenue by the end of this year, more than any other company. Facebook is second with an estimated $5.89 billion, while Yahoo is in the third position with an estimated $3.63 billion.

Google will continue to be at the top also because it has a content advantage on so many levels, believe researchers. According to Rocco Pendola, technology analyst, Google platforms direct users to Google content which leads to advertising dollars. Moreover, the company does content discovery through search, YouTube and other channels much better than anybody else.

“Google does not let the massive opportunities it has for “other” revenue growth distract it from its bread and butter,” says Pendola adding that Google will effectively monetize these opportunities in the coming months.

Moreover, the Internet giant has already captured a share of the market in emerging nations with newer and localized content and search services. Therefore, they believe even though Google’s third-quarter results may have seen a decline in its average ad prices, analysts and investors are optimist on the number of revenue-generating clicks on those ads is rising at a much faster clip.

This has resulted in a 36% increase in Google’s earnings for the three months ending in September.

Yahoo is revamping too..

Meanwhile, Yahoo is also going through a massive transformation. Recently, its email services underwent a new look with upgraded features and looks. According to RBC Capital Markets, Marissa Mayer’s year-long association with the company has certainly brought about a difference in its business approach, there are certain other areas that need to be addressed to stay ahead in the race. According to RBC report, this also means there is increased pressure on management to deliver.

Last quarter, Yahoo shed light on its good performance of many products which have been revamped and overhauled since Mayer arrived. There was a threefold increase in uploads to Flickr, its photo-sharing service and some steps to improve its mobile apps.

Last quarter, paid clicks increased by 21% compared to a year earlier, driven by redesigns to Yahoo’s search ads and its user interface. But prices-per-click were down 8%, in part due to increased traffic in emerging markets, where rates are lower.

“It will take time for these improvements to translate into profits, but they represent the “first concrete step in the turnaround process,” according to researchers at RBC. Perhaps the increase in visitor count in the September report by ComScore is also an evidence of its long term success that is showing up, according to some. Yahoo’s $1.1 billion acquisition of blogging platform Tumblr is also expected to open the door for increased traffic.

The report says Yahoo’s strategy is to reinvigorate the brand by designing engaging products. If they get that right, monetization can follow.