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Wednesday, April 22, 2009
Following on the heels of mixed results from Google, Yahoo released not-surprising numbers showing weak profit and year-over-year shrinkage of overall revenue.
To put it in perspective, if you weighed their Q1 2008 revenues against Google's Q1 2009 revenues, Google would have been three times as big. (That Yahoo sports more employees per revenue dollar by far is, of course, part of the problem -- and now the source of Carol Bartz f-bombs.) But year over year Yahoo declined again ($1.5 billion in revenues as against Google's $5.5), so proportionally it becomes even smaller as measured against its main rival.
Carol Bartz ranting in a conference call? Imagine what might have been accomplished if this type of common sense had arrived on the scene eight or nine years ago. Or at least a couple of years ago, when we urged Jerry Yang to "get rid of the clutter, and geek up." It's becoming clear now that Bartz doesn't do this for ego's sake; it comes from a focus on results.
Past coddling of redundant employees on mysterious missions is only part of the problem, of course. Yahoo's no startup, and austerity won't be the answer either. Yahoo faces similar fundamental problems to any digital media business. Few have definitively solved the business model problem because eCPM's on digital content -- other than search and classifieds -- are too low and there is no proof they're going to trend rapidly upward. As targeting improves and as buyer-seller efficiency issues finally get solved, there is still some upside around the corner.
And what about monetizable "inventory" -- or the degree of open-to-some-monetization user attention to the various online channels? Trending upward, to be sure. But not as rapidly as it once was.
The only sure answer is that the trend is up and that clutter and fragmentation need to give way to continued consolidation. Despite hopes to the contrary, there won't be a huge number of profitable digital media companies simply because inventory and ad rates are finite. The few left standing will have made good consolidation and acquisition moves. Bartz, for one, seems to understand all of this.Labels: yhoo
Posted by
Andrew Goodman
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D'oh!
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