Google-Yahoo battle persists

LOS ANGELES — Yahoo, no longer the Internet's top-visited site, is facing increased pressure from longtime rival Google.
The battle intensified Friday when Google purchased online advertising firm DoubleClick for $3.1 billion. The sale gives Google access to online display advertisers, which is Yahoo's strength.
Yahoo has been trying to catch up to Google, with a late-2006 corporate restructuring and the February release of a new search advertising system, code-named Panama. And ahead of it first-quarter earnings report on Tuesday, Yahoo has forged a number of substantial media partnerships:
•Last week, Yahoo was selected by Google rival Viacom to place pay-per-click advertising on 33 Viacom sites, which include MTV.com and comedycentral.com.
•It's also part of an alliance with NBC Universal and News Corp. for a new video service starting later this year that will aim to compete with Google's YouTube. The service will be distributed to viewers at Yahoo, Microsoft's MSN and News Corp.'s MySpace.
According to researcher Nielsen Net/Ratings, Google dethroned Yahoo as the most-visited site on the Web in February, but rival ComScore still has Yahoo on top, with 129.6 million visitors in March to Google's 111.7 million.
Yahoo's e-mail program is still No. 1, with 243 million users in March.
Yahoo disappointed investors in 2006 when it disclosed softer advertising sales and a delay of Panama, which was aimed at generating more revenue.
Yahoo declined to comment for this story. The company has said that the economic impact from Panama won't be felt until the end of the year. At a recent industry conference, Yahoo CEO Terry Semel said he was "all smiles," about the early results.
Researcher ComScore Media Metrix said that click-through rates — the number of times Internet surfers opted to look at the ads — rose 9% for Yahoo in Panama's second week in operation.
"It's too early to say whether Panama will fix Yahoo's problems, but at least it's progress," says Jeff Lanctot, senior vice president of interactive advertising agency Avenue A/Razorfish. "Early returns are promising."
Danny Sullivan, editor of the searchengineland.com website, says Yahoo is doing all the right things — its problem is being in Google's shadow.
Yahoo's share of search has slightly dipped, or remained flat, and that in itself is a "huge victory," Sullivan says. "Microsoft's share has substantially fallen in the last year, while Yahoo has held its own."
According to market researcher Hitwise, Google's share of search grew to 64% in March, from 58% the same time a year ago. MSN's fell to 9% from 13%. Yahoo was relatively flat at 21%, from 22%.
Google's dominance is so great, and growing, that several analysts have suggested that MSN and Yahoo could solve their woes by joining forces, with Microsoft buying Yahoo to gang up on Google.
"Yahoo would be a logical partner for Microsoft," says Scott Kessler, an analyst at Standard & Poor's.
Google originally provided search for Yahoo. But as Google grew into a worldwide phenomenon, Yahoo severed ties.
Yahoo paid over $2 billion to acquire several companies, including Overture.com and Inktomi, and create its own search engine technology.
Yahoo's stock is trading at around $31, up from $25 a share at the beginning of the year, but virtually unchanged from the $31.13 it traded for on April 13, 2006. Google's stock closed Friday at $466.29, up from $460.48 as the year began and $402.16 a year earlier.
The DoubleClick acquisition is billed as the largest in Google's history; last year Google paid $1.6 billion for video-sharing site YouTube.