CNET: Yahoo accounting change in earnings spotlight

CNET reports that for Overture, TAC (traffic acquisition costs) as a percentage of revenue are growing due to competition for deals with portals. That's one reason Yahoo and Overture became one, to keep those costs in-house. It creates a domino effect. Marketers desperately want targeted traffic, so Google and Overture extract the highest possible price the marketer is willing to pay, down to a keyword level. Then the portal extracts the highest possible percentage of revenue from the paid placement provider. The paid placement provider ends up acting as broker and facilitator. In the end, the portal is the true money winner.