Wednesday, October 19, 2005

Yahoo Revenues Soar , But Text Ads Stumble as Overture's Meisel Bows Out

The Wall Street Journal has good number crunching on Yahoo's earning report, but The New York Times's coverage has more inside scoop and analysis. Yahoo's efforts to build strong destination content to support brand advertising seem to be on track, but search-based ad revenues and profits appear to lag significantly behind Google - hence the announced exit of Overture chief exec Ted Meisel. The segregation of Overture's efforts probably made some sense in the beginning when they acquired a known entity, but as Yahoo moves towards an integrated advertising strategy that provides access to all advertising venues it no longer serves them well. While Yahoo certainly has their work cut out for them wringing out more margin and growth from text ad programs, the harder trick will be for Google to develop brand advertising revenues on top of text ads. There are limitations as to how well Google can do this as long as they insist on having ownership of traditional destination content sources, as Yahoo has done, but as Google has concentrated on creating more novel venues in which to find and consume content from others it may maintain a comfortable cushion for a while from text ad revenues while it sorts out brand advertising. Neither approach is 100 percent right, but with traditional editorial content being swamped by the proliferation of user-generated and non-traditional media in many venues, the numbers may favor for some time yet those who are content to let others own media properties.
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