Silicon Alley Insider reports Yahoo’s search ad share dropped 36% in the fourth quarter of 2008. The numbers come from AdGooroo, that claims Yahoo’s search ad share was 30.4% in September, then dropped in 23.7% in October, then to 20.4% in November and then to 19.4% in December. Meanwhile, Microsoft grew from 12% in October to 16.4% in December.

They then add that, based on watching Yahoo’s top advertisers, it appears that Yahoo ads are paying a lot less than Google ads. In short, search ad arbitrageurs are buying traffic from Yahoo and cashing that traffic in on the Google ad side.

This may explain the recent reminder from Yahoo about how they can modify advertisers accounts, potentially increasing advertisers bids and campaigns. Which leads Yahoo to not many options but a deal with Microsoft – soon.

Related Topics: Yahoo: Business Issues | Yahoo: Search Ads

About The Author: Barry Schwartz is Search Engine Land's News Editor and owns RustyBrick, a NY based web consulting firm. He also runs Search Engine Roundtable, a popular search blog on very advanced SEM topics. Barry's personal blog is named Cartoon Barry and he can be followed on Twitter here. For more background information on Barry, see his full bio over here. See more articles by Barry Schwartz