Yahoo Sees Q4 Ad Surge

Putting solid numbers on recent forecasts that the online ad market is turning the corner, Yahoo! predicted that its ad sales would surge in the fourth quarter, growing at least 22 percent from the same period a year ago.

“The brand advertising continues to grow sequentially,” Yahoo! CEO Terry Semel told an audience at the Credit Suisse First Boston Media Week conference on Thursday. “We are seeing a very good trend of growth in that space.”

Semel said that despite the mess at AOL, where advertising revenues next year are expected to drop in half, Yahoo anticipates solid 20 percent growth in 2003.

The Yahoo! chief executive said the company was thriving thanks to an overhaul in its advertising sales team in the past 18 months. While the company had it easy during the dot-com boom, the collapse of the market for Internet startups forced the company to focus on traditional advertisers.

“We were doing a very poor job in a marketplace that had virtually collapsed,” Semel said. “We really did change and we really did begin to see progress.”

Semel’s upbeat prognosis for Yahoo! backs up forecasts from eMarketer and others that the two-year online advertising drought is coming to an end. While the overall numbers show little growth, the collapse of advertising at AOL has been blamed for skewing the numbers.

In addition to Yahoo!, the Online Publishers Association last month said its members, mostly major newspapers’ online operations, had recorded an average revenue growth of 36 percent in the third quarter.

Since Semel took the reins 18 months ago, Yahoo! has sought to add new revenue streams and reduce its traditional reliance on online advertising, in order to offset the prolonged downturn in the Internet advertising market.

“We hardly talked to Yahoo users,” he said. “It was an enormous learning curve for our company.”

In addition to revenue derived from its HotJobs unit, Yahoo! has used its technology infrastructure to roll out a number of paid services for companies, including Webcasting and a portal business. Yahoo! also struck a dialup and DSL agreement with SBC Communications.

Yahoo! has recently added further premium services. Last month, Yahoo! rolled out a premium e-mail offering, following its quiet testing of a bevy of bundled premium services.

Semel said listings and fees now make up 34 percent of revenue, growing 124 percent from a year ago. By the end of the year, he said the company would have 2 million customers. In three to four years, the company plans to have 10 million.

“It’s definitely paying off for us,” he said. “We are no longer a company with one revenue stream.”