With a number of online marketers getting a little concerned with the large drop in ad revenue of Yahoo (YHOO), we are taking a deeper look into what, if anything, it means for the overall online ad market.
In this post we'll look at Yahoo itself and see if, as some analysts are saying, if this problem is one connected to Yahoo itself.
First, we'll look at it from the competitive view. Their largest competitor is of course Google (GOOG) and most people believe that part of Yahoo's problem is directly related to that competition. They believe that Google's growth is directly related to Yahoo's losses. Google isn't expected to partake in the same slowdown that Yahoo! has experienced.
Merrill Lynch (MER) analyst Justin Post said concerning Yahoo's problems that, "more company-specific issues such as slow branded-ad share growth, affiliate weakness, and weaker traffic to vertical sites such as Yahoo! Finance," are the contributing factors, rather than an industry-wide problem.
(AP)
Still, even though this is hitting Yahoo the hardest, the online ad world is changing. The largest portals - Google, Yahoo, and Microsoft's MSN (MSFT) are going to continue to feel the pressure of increasing competition. Ad dollars are being spread across a number of different online web sites with high traffic volume.
Portals are no longer the only play in town as YouTube, and News Corp.'s (NWS) MySpace, among many others, are beginning to draw the attention of companies. In a way, it's similar to when we had the big three TV networks and then had cable come along and start nibbling into the ad dollars. This will continue on for years ahead as more and more companies go to many high-traffic and niche web sites.
The online dollars aren't going to go away, but the distribution of them is going to be spread all over the web. It is the aggregators that will probably have the hardest time in the near future in keeping their ad revenue up.
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