Yahoo plods along, cost-cutting raises profits while revenue falls

Yahoo Inc. plodded through another sluggish performance in the second quarter.

The disappointing results, released Tuesday, may intensify pressure on Yahoo CEO Carol Bartz, who has spent the past 2.5 years trying to turn around the internet company.

Yahoo earned $237 million, or 18 cents per share, during the three months ending in June. That’s an 11% increase from $213 million, or 15 cents per share, at the same time last year.

The earnings, bolstered by cost cutting undertaken since Bartz’s January 2009 hiring, matched the projections among analysts. But Yahoo’s revenue sank at a time when advertisers are pouring more money into the internet.

Revenue totalled $1.23 billion, a 23% decline from $1.6 billion at the same time last year.

That comparison is misleading because Yahoo had to change the way it booked revenue because of an internet search partnership with Microsoft Corp. that kicked in after last year’s second quarter.

Yahoo’s net revenue–the amount the company keeps after paying advertising commission–is a better indication of how the company is faring against competitors such as internet search leader Google Inc. and Facebook, the owner of the web’s trendiest hangout.

Net revenue totalled $1.08 billion, down 5% from last year. The drop looks even worse compared with what’s going on at internet search leader Google, whose net revenue surged by 36% in the second quarter. As a privately held company, Facebook doesn’t release its financial results, but research firms tracking the internet ad market say the social network is gaining a bigger piece of marketing budgets.

If not for the effects of the Microsoft search deal and the closure or sale of some services since last year, Yahoo said its net revenue would have been 1% higher than last year.

No matter how the figures were sliced, Yahoo’s net revenue fell about $20 million below analyst forecasts.

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Facebook cost per click advertising costs on the rise

The cost of social media marketing is on the rise if latest industry research is anything to go by, according to a report published on utalkmarketing.com.

Facebook cost per click advertising costs have risen by 74 per cent over the past 12 months, a study by TBG Digital has found.

The increase far exceeds the 45 per cent rise in costs of display advertising in the Unites States, United Kingdom, France and Germany – the largest markets.

Commenting on the findings, Simon Mansell, CEO of TBG Digital said: “There is a growing belief across the media sector that social media advertising could displace more traditional forms of advertising.”

Typically, the cost of a Facebook advert initially depends on the site itself and then subsequently an auction.

An example price of an advert  – specifically aimed at UK users over the age of 18 – for June 19 from Facebook’s self-service system, was suggested at a rate of 68p per click.

News brought to you by ClickThrough – a provider of SEO Services Pay Per Click strategies.

Tags: cost per click, facebook

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