Ok, so Yahoo's stock got hammered yesterday for warning that sales revenue would be slower in the third quarter and that they are seeing slower growth in the automotive and financial services sector. Yahoo's total revenue was $5.3 billion last year and according to eMarketer via the article both of those sectors each account for 12% of ad spending. Layering on top of that are more places on the internet that are siphoning off eyeballs (YouTube, MySpace, finance blogs, etc) and of course the analysts like to point out that Yahoo!'s search platform (Overture) is in need of a face-lift. Wow, seems like a lot is going on here. Is this a slowdown? No, just a little speed-bump.
In the finance sector, things are moving around quickly and with consolidation in the brokerage category from the past year, Yahoo! Finance lost two big spenders in Harrisdirect and TD Waterhouse. Since I directed Harrisdirect's online advertising for 5 years I ought to know how valuable those buttons are 
worth. The quotes results package, which Harrisdirect tested for a few weeks as the fourth button (it used to be 3), is the premier spot on the internet and all of the brokers compete for it. As you can see in the screen shot, E*trade is now one of the buttons when it wasn't there last year; taking TD Waterhouse's spot. E*trade and Harrisdirect were part of the next tier of spenders last year at this time and a merger between those two eliminated a spender as did the TDAmeritrade merger. Now, it's not to say that other spenders like Banks and Insurance companies can't jump in and pick up the slack, but it takes a longer sales process to educate these folks as they look to test, where I would have jumped in if a good deal was presented to me. Plus, the price of the buttons (multi-million dollars per year) can only be sold to a group of advertisers that will continue to shrink.
Next is all of the talk and press on the search platform. Can it use an overhaul? Yes. And, obviously from recent data from Hitwise, Google holds a commanding lead of 60% of all searches, while Yahoo comes in at 23% (MSN = 12%, Ask=4%). Can an overhaul take over Google? Probably not, but it certainly can boost the amount of searches. Personally, I've been turning to Yahoo search more and more when it comes to trying to buy those annoying $5 minimum cost per click words on Google (ex - Hillary Clinton). Yahoo search has become the Walmart of pay per click words where I can buy volume at a dirt cheap cost especially when clients can't afford to spend $10K or more per month (ie I hit the monthly budget with more clicks and conversions). What does Google have? Name cache and the majority of US searches and that won't change.
Ok, we have a speed bump in the finance category and the continued search issue, but what I personally think is hurting Yahoo the most is the competition for their user's attention span. Yahoo! still is the #1 ranked finance site for traffic, followed by MSN, AOL, and Dow Jones (notice Google is not in the top 10) so it can't be traffic and I'm sure their users are still getting a ton of quotes. However, I wonder if the average time spent has dropped or the % of a user's internet time spent on Yahoo dropped. There are only so many blogs, video sites, MySpace pages, and Bud.TV sites that a person can visit in a day. And, the advertisers are going to follow those people when they employ targeting techniques from Tacoda, RevenueScience, and the Advertising.coms of the world - advertisers, especially sophisticated ones, are starting to buy users and not sites. It also doesn't help that the portal strategy is fractured as well. How many of you used to use Yahoo as your homepage and now use your broadband provider?
Yahoo!'s challenge now is to push more of these new finance advertisers through the sales process and build out more and more of their content play to try and keep people longer on their site. In this day and age with so many places to visit, it should be more about time spent and pages accessed, rather than just impressions. Heck, trying an old strategy of being an on ramp to the internet might even help. BTW - I'm keeping my Yahoo! shares...
PardonMyFrench,
Eric
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