We've looked at the recent slowdown in ad revenue at Yahoo (YHOO) and whether it is part of an overall trend in the market or connected directly to issues in the company itself. Last post we looked the competitive side of the market. This post we'll look at targeted options.
Yahoo has had strength in the banner ad space for quite a long time. The problem with that is that targeted advertising as an option is growing and Yahoo is weaker in this area than others.
When we talk about targeted ads, don't get confused, it's just another way of saying that advertisers are looking more at niche sites against the general content aggregating sites. This growing trend will cut more into those offering banner ads like Yahoo.
While targeting is more expensive to companies, it does bring far better sales and so marketers don't mind paying a premium for them. Again, this will cut into the online display advertising that Yahoo has specialized in for so long.
The other problem for Yahoo concerning this is that its advertising system, Panama, is behind in its launch, and won't be out until sometime in the first quarter of 2007. So they will fall further behind probably for months until they get that in place and offer the targeting option to their customers.
The thing to learn here is that Yahoo has made the classic mistake of responding too slowly to the changes that have been happening all around there for a long time. They are paying for the lack of foresight now.
For those of us that are using the ad model, understand that targeting is going to be in growing demand and those that provide the traffic and communities built around the products companies want to offer, will be outrageously successful for a long time to come.
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