Yahoo's Share Of The Search Market Fell Below 10% For The First Time Ever

Yahoo's share of the search market is under 10% for the first time ever, says Ben Schachter of Macquarie Research. Yahoo's actual share is 9.8%, its lowest ever.

Ben Schachter of Macquarie Research reports the following:

• YHOO falls below 10% for the first time ever. We are particularly concerned with the ongoing deterioration in search share for YHOO, which has been steadily declining since we began tracking in 2006 and dropped another 20bps to a new all-time low of 9.8% in June. YHOO share is now down more than 160bps y/y, and has fallen nearly 320bps from two years ago. YHOO's share remains firmly entrenched in its long-term downtrend, taking another step down in June after briefly stabilizing in the 10.4%-10.0% range earlier this year. Notably, YHOO's total query volume growth (down 21% y/y) continues to meaningfully lag GOOG and Bing (down 6% and up < 1% y/y, respectively), and the industry in aggregate (down 7% y/y). With no apparent structural bottom in YHOO's search business, it is difficult to envision how YHOO will be able to sustain the paid click volume growth it has reported for the past two years. We note that YHOO's reported search revenue includes its partner network; many of these partners were restricted by GOOG and thus switched to YHOO (generating faster revenue and paid click growth). We believe that this is not sustainable, and we remain cautious on the LT structural challenges facing Yahoo in search advertising.
• Bing rises to a new all-time high (up 40bps) and GOOG remains at last month's peak of 67.6%. June comScore data shows Bing at 19.2%, up 40bps m/m, and marking another new all-time high. Bing's share is up ~130bps y/y, and more than 350bps from two years ago, with the majority of Bing's share gain coming at the expense of YHOO. GOOG share also remained strong at 67.6%, matching the peak recorded over the past two months and in January '13.