Yahoo, Microsoft search gains not what they may seem

June 11, 2010

Yahoo’s search revival continued in May, but with a big asterisk.

After watching its share of the U.S. Internet search market erode for more than a year, Yahoo logged its third consecutive month of gains in May, according to the latest comScore figures, which were dutifully reported by various Wall Street analysts on Friday.

YHOOSIGNAGEYahoo’s search share increased to 18.3 percent in May, up from 17.7 percent the month before.

Microsoft, which has been steadily gaining share since it introduced its new Bing search engine last year, upped its share to 12.1 percent in May, from 11.8 percent in April.

Meanwhile, top-dog Google, saw a slight decline in May, with search share of 63.7 percent, compared to 64.4 percent in April.

But the latest ComScore data is based on clever techniques that some of the search sites have started using to boost their numbers.

UBS analyst Brian Pitz notes that Yahoo’s share improvement in May comes from counting an additional 284 million search queries of so-called “contextual searches,” which is a fancy term for features like photo slideshows in Yahoo News in which every click to a new slide counts as an additional search query.

That’s because at the bottom of each photo are search results from an automatically-generated “related search” query – Click on a new photo and you’re conducting a new search, whether you knew it or not.

While Yahoo’s share numbers are now more consistent with Microsoft, which already made use of these kinds of techniques, Pitz points out that it doesn’t necessarily indicate a revival of Yahoo’s search business.

“We do not expect these changes to have a material economic impact, as the user intent is likely to view multiple photos in the slideshow, rather than perform multiple searches,” he writes in a note to investors.

Broadpoint Amtech’s Ben Schachter is even more blunt, noting that Yahoo’s search share actually declined to 16.6 percent in May, while Microsoft’s was flat, if you exclude tricks like contextual shortcuts and image slide-shows from both April and May data.

Of course, Yahoo’s slide-show search techniques are but one aspect of the company’s broader strategy to revive its search business, Schachter said, pointing to more traditional efforts such as improving the user experience and increased distribution and marketing.

But, he noted, “we do not believe this data will cause many to think that Yahoo’s search share problems are now solved.”

Yahoo Senior VP of Search Products Shashi Seth defended the validity contextual search features in a blog post on Thursday, noting that “Today, tons of searches can actually be done without ever hitting return on a search box.”

“People no longer search to find a list of of blue links; they search to find answers in the shortest amount of time possible,” he said, noting that Yahoo is eager to talk to firms like comScore about how best to measure the new “paradigm” of search.

Meanwhile, comScore said it is re-evaluating its methodology for determining search share in light of the recent changes by some of the portals. The firm said in a blog post that it could introduce a new basis quantifying search share for the July data.

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