Yahoo 2013 Annual Report Download - page 50

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and Affiliate sites. Search revenue is recognized based on Paid Clicks. A Paid Click occurs when an end-user
clicks on a sponsored listing on Yahoo Properties or Affiliate sites for which an advertiser pays on a per click
basis. Under the Search Agreement with Microsoft, in transitioned markets we report as revenue our 88 percent
revenue share as we are not the primary obligor in the arrangement with the advertisers. See “Significant
Transactions—Search Agreement with Microsoft Corporation” above for a description of our Search Agreement
with Microsoft. In non-transitioned markets, we paid Affiliates TAC for the revenue generated from the search
advertisements on the Affiliates’ Websites. The revenue derived from these arrangements was reported on a
gross basis (before deducting the TAC paid to Affiliates), as we were the primary obligor to the advertisers in
non-transitioned markets and we recorded the related revenue as it was earned. We also generate search revenue
from a revenue sharing arrangement with Yahoo Japan for search technology and services.
Search revenue for the year ended December 31, 2013 decreased by 8 percent compared to 2012. Search revenue
decreased primarily due to declines in Affiliate revenue in the Asia Pacific region resulting from the closure of
our Korea business, and declines in Affiliate revenue in the EMEA region due to the required change in revenue
presentation for transitioned markets from a gross (before TAC) to a net (after TAC) basis. This was partially
offset by increased search revenue in the Americas region, which resulted from an increase in sponsored searches
on Yahoo Properties and higher revenue per search due to improved ad formats.
Search revenue for the year ended December 31, 2012 increased by 2 percent compared to 2011. Search revenue
increased due to increased search revenue in the Americas region which resulted from an increase in sponsored
searches on Yahoo Properties, as well as higher revenue per search. The increase was partially offset by
decreased search revenue in the EMEA region and other markets due to the required change in revenue
presentation for transitioned markets from a gross to a net (after TAC) basis.
Other Revenue
Other revenue includes listings-based services revenue, transaction revenue, royalties, and fees revenue. Listings-
based services revenue is generated from a variety of consumer and business listings-based services, including
classified advertising. We recognize listings-based services revenue when the services are performed.
Transaction revenue is generated from facilitating commercial transactions through Yahoo Properties, principally
from Yahoo Small Business, Yahoo Travel, and Yahoo Shopping. We recognize transaction revenue when there
is evidence that qualifying transactions have occurred. We also receive royalties from joint venture partners that
are recognized when earned. Fees revenue consists of revenue generated from a variety of consumer and business
fee-based services as well as services for small businesses. We recognize fees revenue when the services are
performed.
Other revenue for the year ended December 31, 2013 increased by 3 percent, compared to 2012. The increase
was primarily due to increased royalty revenue resulting from the amended TIPLA agreement with Alibaba
Group. This was partially offset by a decrease in listings-based revenue in the Americas region.
Other revenue for the year ended December 31, 2012 decreased by 1 percent, compared to 2011. There was a
decrease in fees revenue from certain of our broadband access partnerships and a decline in listings revenue in
the Americas region. This decrease was partially offset by an increase in the Americas region due to new and
amended partner deals, as well as an increase in royalty revenue resulting from the amended TIPLA agreement.
Display and Search Metrics
We present information below regarding the number of “Ads Sold” and “Price-per-Ad” for display and the
number of “Paid Clicks” and “Price-per-Click” for search. This information is derived from internal data.
“Ads Sold” is defined as display ad impressions for paying advertisers on Yahoo Properties. “Price-per-Ad” is
defined as display revenue from Yahoo Properties divided by our total number of Ads Sold. Our price and
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