Yahoo's search share plunges in July; MSN, AOL follow

In what could be dire news for the world's #2 search provider, as Nielsen Online reports, Yahoo in July lost a full 11% of the US-based search traffic it had the previous year, down to only 17.4% of the nation's searches, or about 1.4 billion.

If you're thinking all the rhetoric against Yahoo since Microsoft's public takeover bid in February may be the cause, the problem is that Microsoft isn't the beneficiary. The number three US search provider on Nielsen's list this morning lost 10% from July 2007 to July 2008, down to under 1 billion searches. Google literally grabbed all of that traffic, with share of US searches rising 16% for the period to 4.8 billion, eclipsing the 60% mark. At about this time last year, Google was just rising past 55%.

Nielsen does not report a margin of error for its search rankings. That's particularly important in the face of disparate rankings from its competition, which show Google even more dominant. Last week, analytics service Hitwise gave Google a 70.77% of all US-based Web searches, with Yahoo actually higher at 18.5%, but still falling. MSN, meanwhile, was flailing on the Hitwise list at 5.36%.

Compare that to an 11.9% rating from Nielsen for MSN for the same month (Hitwise admits it omits club.live.com from its rankings; Nielsen makes no such admission), and you start to wonder, to what degree does audience demographics play a role in these two companies' figures?

In a June 17 report issued just after the news of Yahoo's advertising partnership with Google, Nielsen's Ken Cassar estimated that the two search entities' respective audiences may overlap by only about 57%. Cassar used that data to reach the conclusion that perhaps too many Yahoo readers who wouldn't click on a Google AdSense ad if they saw it on Yahoo, would then click on that same ad appearing on Google.

But it also suggests something else: Not only might Yahoo's and Google's search share be dividing, but their audiences may be splitting. If that's true, the question becomes whether a Yahoo customer is, by definition, a search customer. If he's not, then the demographic that Hitwise targets could be skewed toward Google.

By Nielsen's count, AOL's US-based search share was only about 4.6% last month; on Hitwise, AOL didn't even register.

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