Yahoo! Profits Down the YouTubes
Yahoo! profits are down 61% over the previous quarter as reported in the Washington Post today. The portal appears to be losing ground not just in search but also in display advertising. Both outcomes were predictable and neither means that online advertising or Yahoo! for that matter are headed for any kind of serious decline.
Yes, Google’s search program is more popular and yes, MySpace and YouTube have hurt Yahoo! but let’s look at the larger picture. The idea that Yahoo! wouldn’t or even shouldn’t lose market share is preposterous. As new players and new money come into the market, a diffusion of dollars to innovative and micro-targeted content has been inevitable for some time.
There is no sign that the spigot of dollars falling out of more traditional media into online won’t continue unabated for several more years. In fact, even in a recession, we believe more dollars will head to the Internet as advertisers will seek ever more targeting and accountability.
So — Yahoo! probably needs to make some acquisitions, it needs to be sure that Panama is good enough to capture some market share from Google and Microsoft but we’re not digging any graves just yet. As pricing for search on Google closes more and more advertisers out, Yahoo! is well positioned to pick up the slack.
