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Wednesday, September 20, 2006

What's Eating Yahoo

In the wake of Yahoo's announcement of an impending softening of ad revenue, various assessments are flying around.

One huge piece of the puzzle that's being underemphasized is international markets. Sure, Yahoo cares about these in a general sense. It's just that from the standpoint of the ad platform, that caring isn't translated into functionality for advertisers.

Translation: you're damn right it matters that Panama was delayed... again.

With the current Overture (Yahoo Search Marketing) platform, you can't advertise specifically to one country in most Scandinavian countries. You can't show your ads just to Canada (unless you're advertising in French). Just to South Africa? Nope.

(What if you want to geotarget to a 300-mile radius around Toronto, an area with a population of roughly 10 million? You can do it with Google AdWords. You can't do it with Yahoo.)

There are 21 markets listed on the Overture home page. To be sure, they're big markets, but in the next 100 markets, there's a chunk of money left on the table.

Even doing US + UK is simply harder because of the platform and customer service silos involved.

It's become glaringly obvious to all that Yahoo's "good enough" isn't good enough anymore - so much so that it's hurting the company's capacity to thrive and grow.

I guess the question is when Yahoo (and MSN) hit their targets for platform and customer service rollouts sometime in 2007, will they have fallen even farther behind? And what kind of click volumes will they be generating by then (will search market shares stay static)?

On another topic, Yahoo keeps losing people to other "environments" like MySpace and Facebook. Wall Street seems to believe Yahoo needs to acquire Facebook. Should they? Probably. But then won't a startup just come along to tap the market for a social-networking-site-not-hosted-by-a-big-company? :)

Posted by Andrew Goodman




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