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Yahoo Bends Under Economic Winds
January 31, 2008 10:56 AM
by
findingDulcinea Staff
Yahoo’s failure to take full advantage of search advertising has left the company prone to bearish markets.
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Yahoo Chief Executive Jerry Yang said the company will lay off 1,000 employees and begin “an aggressive investment posture.”
The company’s shares fell 11 percent in after-hours trading on Jan. 29, with a price-per-share decline of 45 percent since October. Its revenue is down 23 percent from the end of 2006.
According to the Financial Times, the drop reflects the company’s failure to tap fully into paid-search advertising.
In 2007, Yahoo collected only 9 percent of search ad revenue, a result dwarfed by Google’s two-thirds share of the market.
Although Yahoo is still the leader in display advertising, “that’s the kind of feel-good ad spending that many fear will get cut first in a recession,” Forbes’ Brian Caulfield writes.
While some companies have slashed advertising expenses during periods of economic uncertainty, there has been an increase in allocations for paid-search advertising, Forbes reports.
“If the economy gets any worse, marketing is always one of the first to go, except that which is provable, and with search you can do that,” says Russ Mann, chief executive of Covario, an interactive marketing consultant.
The company’s shares fell 11 percent in after-hours trading on Jan. 29, with a price-per-share decline of 45 percent since October. Its revenue is down 23 percent from the end of 2006.
According to the Financial Times, the drop reflects the company’s failure to tap fully into paid-search advertising.
In 2007, Yahoo collected only 9 percent of search ad revenue, a result dwarfed by Google’s two-thirds share of the market.
Although Yahoo is still the leader in display advertising, “that’s the kind of feel-good ad spending that many fear will get cut first in a recession,” Forbes’ Brian Caulfield writes.
While some companies have slashed advertising expenses during periods of economic uncertainty, there has been an increase in allocations for paid-search advertising, Forbes reports.
“If the economy gets any worse, marketing is always one of the first to go, except that which is provable, and with search you can do that,” says Russ Mann, chief executive of Covario, an interactive marketing consultant.
Headline Links: Yahoo’s stock falls
An 11 percent drop in Yahoo’s share price in after-hours trading on Jan. 29 brought its total decline since last October to 45 percent. Chief Executive Jerry Yang said the company will lay off 1,000 employees. Yahoo’s shares plummeted on concerns over the company’s performance.
Source: Financial Times (registration may be required)
Although Yahoo reported better-than-expected earnings in the fourth quarter, its stock fell during after-market trading. The company’s revenue is down 23 percent from end-2006 results. Chief Executive Jerry Yang said the company should try to attract more search advertising. Yahoo collected 9 percent of search ad revenue in 2007. Two-thirds of market revenue went to Google.
Source: Forbes
Yahoo’s stock was downgraded by several brokerage firms. “Yahoo shares are stuck in purgatory for at least another two or three quarters as the company continues to implement its new growth strategy, realigns its workforce, adjusts to less favorable partnership contracts, invests for the future and faces uncertain economic trends,” George Askew of investment brokerage firm Stifel Nicolaus told MarketWatch.
Source: MarketWatch
Opinion & Analysis: Economic recession is advertising’s adversary
Although Yahoo is the industry leader in display advertising, “that's the kind of feel-good ad spending that many fear will get cut first in a recession,” Forbes’ Brian Caulfield writes. Yahoo has failed to tap into paid-query advertising, and declining revenue makes the company particularly vulnerable to economic shocks.
Source: Forbes
Advertising expenditure is the first thing to be cut in an economic downturn, writes The Economist. The magazine argues that a drop in ad spending is likely, but predicts that search advertising will not be impacted. In fact, the Internet may attract a larger share of ad revenue than previously seen.
Source: The Economist
“Yahoo is navigating the waters of Internet advertising like a goldfish evading a shark, in the form of Google,” according to a Jan. 19 comment in The Wall Street Journal. Yahoo needs a total makeover in order to keep its competitive edge, and so far CEO Jerry Yang has failed to provide an antidote to the company’s decline.
Source: The Wall Street Journal (free registration required)
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