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February 05, 2007

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as

last time i checked yahoo had ~29% of the search market, so while it can and should deliver more search traffic not sure it is accurate to say that they don't have enough. They have plenty of traffic that they need to do a better job of monetizing.

Alex Moskalyuk

The sponsored links are not limited to search, and get shown on other Yahoo! properties, like a news story here
http://news.yahoo.com/s/ap/20070205/ap_on_hi_te/advertising_alternative;_ylt=AujcPOIPDBpcccBQC.o9RWMjtBAF;_ylu=X3oDMTA2Z2szazkxBHNlYwN0bQ--
While you might not see immediate monetization of Mail, improved numbers of Search, News, Finance and other properties should boost the income across the board.

Joe Duck

Don, Noooooo! I just bet a kilobuck this will jump start YHOO's share price!

Several good points, but why so pessimistic about the conversion on clicks at .04? Google search and Yahoo are now functionally equivalent with MSN and ASK close, but Google is *perceived* as better . Important, but won't this perception erode over time, giving great share to the competition?

DonDodge

Joe, if you are talking about Panama's impact on Yahoo's stock price than you may be right. The stock market marches to the beat of a different drum. Panama will certainly add a few percentage points to their bottom line and that will probably drive the stock price. On the other hand, Google just reported a block buster 4th quarter and the stock dropped $30, so go figure.

Advertisers and consumers tend to jump on the bandwagon of the market leader. That leadership position and brand image is very difficult to overcome. Better technology is not enough to swing advertisers and consumers, and I don't think Yahoo's technology is better than Google's or Microsoft's.

Alex, it is true that ads can be somewhat targeted based on news stories, finance stories, or even email, but not with the precision and effectiveness that search results pages can. It is a very subtle but powerful difference.

Users will say Google is better but they usually can't articulate why. Is it speed, relevance, clean design, fresher results, fewer ads? Probably some combination of all of these but it is not obvious which factors carry more weight.

Joe Duck

Thx Don. I'm cool, my 1k in calls are up $600 after today.

Biplav Misra

I have a hypothesis and would like your comment on it.
Pre-Panama launch, Yahoo had a system which would give most importance to the bidding amount by the advertisier and one with highest bidding would be placed highest in the search results.
It would then make sense for advertisiers who were not too admired by the users(based on CTR) to pay a higher price and be ranked at top in Yahoo search? I would assume such customers as the traitional customers of Yahoo.

Now with Yahoo going the google way with Panama, the highest 'expected revenue' generator add will be placed at top. Thus going by my hypothesis the traditional advertisiers of Yahoo will feel alienated and this could adversely effect the business of Yahoo!

Don Dodge

I think it is more likely that Yahoo's existing advertisers will modify their ads and landing pages to get a higher quality rank and CTR (Click Through Rate) at Yahoo.

Some may be alienated and leave, but I think most will adapt to the new system.

Advertisers and users are pretty loyal, or perhaps resistant to change. This is true for all companies and services. It takes a lot to get anyone to change their behavior or patterns.

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