Yahoo! reported a 48% surge in revenues from marketing services to $245.1m (£147m). The strong show by advertising comes against a background, over the last two years, of diversifying revenue streams to reduce its reliance on selling advertising space.
Terry Semel, chairman and chief executive officer at Yahoo!, told The New York Times: "When I first came to Yahoo!, advertising was a one-trick pony: branded advertising. We have a much more expansive way of looking at advertising today."
Revenue from subscriptions to services such as personals, horoscopes and premium video content has also risen strongly, showing a 38% leap to $79.4m for the quarter ending September 30.
The company released its results the day after it completed its $1.6bn acquisition of Overture, the paid-for search specialist. Yahoo! said that Overture has had "positive and productive discussions" with Microsoft's MSN about continuing their sponsored-search deal.
There is a worry at Yahoo! that what happened to LookSmart could happen to Overture. LookSmart recently lost half of its market value when it was announced that its search deal with MSN was ending.
"As we more fully take advantage of the revenue potential across our entire business, we believe we can continue to meet our long-term objective for superior, consistent and sustainable growth. In this quarter, our business grew stronger and better and we continue to remain optimistic about the future," Semel said.
For the fourth quarter, Yahoo! is forecasting operating income of $130m to $150m and revenues of $462m to $502m.
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