Paul Kedrosky says "Time spent per site favors Yahoo over Google" and concludes that "Yahoo has so much leverage in 2007. With the company so far out in front of Google in terms of time spent on Yahoo properties, it comes down to monetization -- Yahoo has the audience, it now has to do something with it. "
Paul makes his point with an interesting chart from Compete.com which shows MySpace with 11.9% of total time spent on the Internet, Yahoo with 8.5%, and Google with just 2.1%. I have the highest respect for Dr. Paul Kedrosky and I really enjoy reading his blog and watching him on TV. But, I must respectfully disagree with him on this one.
I wrote a story about this last month "Why Yahoo's Panama Project won't be enough" The basic premise was that Google gets 88% of its traffic from search result pages where they can sell targeted PPC (Pay Per Click) ads. Yahoo gets only 11% of its traffic from search.
Yahoo gets 33% of its page views on Yahoo Mail where at best you can sell low margin CPM ads. Another 32% is hits on the Yahoo home page...again, not targeted so all you can do is sell CPM banner ads. Take a look at this chart
Remember back in the Web 1.0 daze... Time on site, page views, stickiness, were the mantra. The problem is that stuff isn't targetable so they end up selling CPM banner ads at a very low price. Google burst onto the scene with highly targeted text ads that are sold on a PPC basis, and the ads are sold auction style to the highest bidder. That fundamental difference is what made Google into a money printing machine.
These two charts illustrate the dramatic difference between Yahoo and Google. It really has nothing to do with search engine technology. It is about the nature of the traffic and how it is monetized. That is why I say the Panama ad serving engine will not make that much difference to Yahoo's bottom line.