The big story in search right now is that Microsoft’s Bing search engine is steadily taking share away from Yahoo, its new search partner. (Click here to see how Microsoft is doing it.)
Forgotten: AOL is still the no. 5 search engine in the U.S. And it’s losing search queries faster than anyone.
AOL actually managed to keep its share of the U.S. search market steady in February at 2.5%, according to comScore. But that’s still down more than a third year-over-year; AOL represented 3.9% of the market a year ago, according to comScore.
And last month, AOL search volume declined by 29% year-over-year, faster than its 16% year-over-year decline last quarter, JPMorgan analyst Imran Khan notes.
Why does this matter? AOL is in the middle of negotiating a new search deal — potentially with Google, potentially with Bing — and it’s going to want to get as good a deal as possible. But with shrinking share, it’s hardly in the position of power, even though it still has a significant share of the market.
To put it in context, AOL’s search revenue is still about a third of its advertising business, and it’s probably pure profit. (Unlike the rest of AOL’s ad business.) But as AOL’s ISP subscription business continues to shrink, search will continue to shrink, too. As AOL noted in its last earnings release, AOL subscribers “tend to search more frequently and typically monetise at a higher rate than non-paying visitors.”
AOL reported $145 million in search revenue last quarter, down 19% year-over-year, and representing 31% of AOL’s total advertising revenue. Given the faster decline in search queries so far this quarter, it’s reasonable to assume that search revenue will decline faster, too.