Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Youssef H. Squali with Jefferies & Company. Please proceed.
Youssef H. Squali - Jefferies & Co.
Thank you very much. Blake, in the long-term guidance that you gave back in March, what kind of economic environment did you bake in there? Would you characterize it as conservative or was it closer to a base case scenario? Because you are basically guiding to growth in the mid-20s for the next couple of years and that far outstrips the growth of the online ad market today. And clearly if you look at street estimates, they are a lot lower, implying a fair amount of skepticism. Thanks.
Blake J. Jorgensen
Thanks, Youssef, appreciate the question. As we said before, the midpoint of our guidance range reflects the best estimate of where we believe the business will perform in 2008 with the economic view that we have today, and certainly the economic view we had back when we set original guidance in January.
We’ve not changed our top line guidance. We’ve changed our bottom line guidance and we believe that the plan is forecasted on market growth rates and our projections for Yahoo!'s growth relative to those growth rates, and I think we spelled out the key components and metrics of all of those growth rates in the plan we showed, the three-year plan we showed the street last month.
Jerry Yang
Next question, please.
Operator
Your next question comes from the line of Jeffrey Lindsay with Sanford Bernstein. Please proceed.
Jeffrey Lindsay - Sanford C. Bernstein
We wanted to ask basically we’ve noticed that TAC is coming down as a percentage of gross revenues, especially internationally. Does that imply that you are now doing better deals on the network, or is it a slowdown or a shift in the network business? And if it is a slowdown, does that mean a loss of network business? Could you just give us an indication as to the dynamics here? Thank you.
Blake J. Jorgensen
Sure. Appreciate the question. Overall TAC rates decreased slightly around 4%. Our average TAC is still around 78% globally. We believe there is continued upward pressure on TAC rates and the rates that we will continue to pay our partners as the competitive dynamics continue to get more difficult.
As we build out our network display business, competitors are also building out a network display business and we expect that we will need to share some of those revenues. That said, we I think internally are very disciplined on the TAC rates that we are willing to pay and the partners that we are willing to go after, and so I think probably what you are seeing is more discipline in the system over time and focusing on really partners that can help drive the strategic alternatives that we are after.
- To read the full transcript on Seeking Alpha, click here »
