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Yahoo Heaped With Negative Vibes

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Between Google and a seemingly endless slew of challengers like Facebook and MySpace, Yahoo could be grilled like a panini in the battle for display advertising dollars.

Yahoo Heaped With Negative Vibes
Yahoo Heaped With Negative Vibes

Even as Google kicked seven kinds of snot out of Yahoo and everyone else in the search advertising market, Yahoo always had its display ad business as a bulwark against disaster.

That may have accounted for Yahoo president Sue Decker’s breezy comment to Bloomberg in January 2006 about how Yahoo is not going to be number one in search. So long as the display dollars kept flowing into Sunnyvale in the billions, why worry?

Bloomberg came back with a reason why, 18 months later. In a recent report, Bloomberg cited some trends that have Wall Street pros muttering darkly about Yahoo:

Yahoo said June 18 that second-quarter sales will be at the middle to low end of its forecast because of slowing display growth.

Year-to-year sales growth in the category decelerated from 38 percent in the first quarter of 2006 to 20 percent in this year’s first quarter and less than 10 percent in the second quarter, estimates Jefferies & Co. analyst Youssef Squali, who is based in New York and rates the shares “buy.”

“We’re seeing some shifts,” Yahoo spokeswoman Joanna Stevens said. “Advertisers have started to experiment with different forms of display advertising.”

Names like Facebook and MySpace have received some of the credit for picking where Yahoo has been fading. The next question: how long will co-founder and new CEO Jerry Yang want to stick it out as top executive, especially if Wall Street continues to exude a lack of confidence in the company’s once-touted display ad business?

Yahoo Heaped With Negative Vibes
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  • http://www.interactions20.com/ David Scott Lewis

    Great writing style!!

    Anyway, I wonder how many of your readers really believe that Yahoo has a chance. You said it all: Squeezed from all sides.

    Doesn’t it also seem like most acquired Yahoo properties almost instantly lose their coolness once they’re acquired by Yahoo? Kind of like a kiss of death. Del.icio.us is hardly as cool as it was and I’m not sure how many Fickr users really know about their relationship with Yahoo.

    Google, Amazon, eBay still have legs. Facebook is too early to tell. IMHO, Facebook will NOT be the winning social network because I don’t believe that the winning network exists just yet. I wouldn’t totally discount MySpace, either. MySpace should come out with ads that portray FB as elitist. And there’s no telling where Microsoft will take this. If I was back at Microsoft, I’d use the XBox as the basis for a social network, trying to marginalize both FB and MySpace.

    Yahoo still matters because it’s in fourth place, not dead (yet), not as irrelevant as AOL (which is still alive). But they have to do many things right. A deal with MySpace, as many have speculated, might make sense, although it’s really an act of desperation on Yahoo’s part.

    • David A. Utter

      I think Delicious and any loss of cool is more of a case of ubiquity than corporate association. Coolness is hard to sustain over time and growth, something that would have happened with or without Yahoo.

      Josh Schacter has managed to create something that works in a very simple fashion and accomplishes a complex task effectively. I don’t envy him trying to juggle the core functionality of Delicious with any pressures to expand its features.