What Yahoos Problems Mean for Search Marketing

Last week, Yahoo's announcement that online ad sales growth was slowing sent Wall Street, and the wider business world, into quite a tizzy. The news sent Yahoo's stock price down by 11 percent, and also hurt Google, which saw a 2.6 percent share price drop. A lot of ink was spilled speculating on whether Yahoo's ad revenue growth slowdown was unique to Yahoo, or indicative of a larger slowdown in online ad spending that might impact more major players. So far, most analysts seem to be lining up on the "it's Yahoo's problem" side of the ledger, which prompts the question: what exactly is Yahoo's problem? Well, obviously, Yahoo has more inventory than it can sell right now. You can see this yourself if you spend a few minutes surfing through Yahoo's sprawling portal, which consists of hundreds of thousands of pages. Many banner placements have been sold, but plenty of spots haven't been booked, and you'll see your fair share of "house ads" for Yahoo's other properties occupying the unsold space. However the real problem is expectation management. Wall Street has high expectations of all the search portals and any slowdown in growth (not even a true slowdown but simply a slowdown in growth) is seen as a failure. The fact that Yahoo CEO Terry Semel singled out ad spending reductions by the automotive and financial sectors as the primary cause of Yahoo's ad revenue woes does indicate that Yahoo is more exposed to such slowdowns than search engines with more diversified clientele. Blog commentator Del.icio.us | Digg | Yahoo! My Web | Furl Bookmark Murdok: Mr. Frog is a leading Search industry visionary. Mr. Frog is a member of the