Why Yahoo's Panama Project won't be enough
BusinessWeek says "Yahoo's Panama Won't Be Enough" to close the gap with Google. The Panama Project is Yahoo's new advertising platform designed to optimize ad dollars per page view. Panama will certainly help, but their problems are more fundamental...junk page views.
BusinessWeek says "It's difficult to put a dollar figure on how much Yahoo stands to gain from Panama because the company does not reveal how much of its overall advertising revenue comes from search. Using data on total search queries, released by comScore, Caris & Co. analyst Tim Boyd estimates that Yahoo made on average between 10¢ and 11¢ per search in 2006, bringing in a total of $1.61 billion for the first nine months of the year. Google, meanwhile, makes between 19¢ and 21¢ per search."
The real problem is the composition of Yahoo's page view traffic. Most of it is junk traffic that is difficult to monetize with ads. Google's traffic is mostly (80%) search engine result pages (SERPs) which are highly valuable to advertisers. Yahoo only gets 11% of its traffic from SERPs. Take a look at this table, based on Hitwise data, to see why Panama may help...but not much.
Yahoo Mail accounts for 33% of Yahoo's traffic, but only 5% of Google's traffic.
Will video pages monetize? Google made a big bet on YouTube, paying $1.65 Billion for the consumer video aggregator. Will they be able to effectively sell advertisements against these video views? Or will it be junk traffic that advertisers are not interested in? If Google can come up with a way to target ads to video and command high advertising rates the YouTube acquisition price will look very reasonable. If not, it could join the list of the "Top 10 Worst Billion Dollar Internet Acquisitions of All Time"
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Nice read, more info to add to my useless knowledge of search engine ranking lol
Posted by: bob smith | April 16, 2008 at 08:02 PM