Comments on: Don’t Blame Panama: The Real Threat Facing Yahoo

By: Josh Kim dot Org » Google v. Yahoo

Josh Kim dot Org » Google v. Yahoo — Thu, 19 Apr 2007 05:17:14 +0000

[...] Yahoo took a beating on the markets today. Thank goodness I haven’t bought any of their stock. [...]

By: Jonah

Jonah — Thu, 19 Apr 2007 02:57:19 +0000

From a marketer's perspective, banners are wonderful. But what about the user? Why was Google successful in the first place? And now they want to do what Yahoo does?

What this means is that their differentiation will erode and more and more they will become the same.

At that point, a new competitor who is driven more by user desires than advertising dollars will come in and offer what Google used to offer: search.

Google will expand themselves to irrelevance. So be it.

By: John Kenney

John Kenney — Wed, 18 Apr 2007 18:48:51 +0000

A couple comments.

-In the long run, Google and Yahoo are both shooting to serve ads not just online as text or banner ads, but in every ad format there is such that there is the best match of audience, purchase behavior, and ad price. So what's at stake here is the growing online ad market, plus the even more massive advertising in print, TV, radio, etc.

-An interesting question is what will the structure of this industry be like in 3-5 years. Network effects and the cost of technology means it will likely be a fairly concentrated industry. But will it be monopolistic like Microsoft in desktop software or maybe more like Intel ($35B) and AMD ($5.6B) in processors, or something more balanced and/or with more players.

-Even though Google appears to be making all the right moves right now, I think a couple things will weigh against them winning Microsoft-like dominance in the long term. One is that advertisers have a long and deep history of spreading money around in every other channel they do business in. The other is that google has been relatively greedy (or at least not very transparent) in it's adsense program. While it has tremendous reach, the publishers on whose sites these ads are being served get a pretty thin slice of the pie for their trouble. My sense is that this slice has been declining as their market power has grown. As a result, both of these groups - advertisers and publishers - will have an incentive to limit the dominance of Google.

-Another thing to note is the role that owning content, app, or other sites where banner/display ads are actually served will play in the battle (i.e., being a publisher). Although YouTube changed things, I believe that Yahoo is still more of a 'publisher' than is google and as such, they are more often capturing 100% of ad spend than is google (which does share at least a little revenue with publishers). Clearly, Google is trying to change that, e.g., web office, etc., but who gets the content side of the business right will also be a factor.

By: Stanley

Stanley — Wed, 18 Apr 2007 16:25:03 +0000

Everyone forgets that Google has a gigantic lead in the Contextual Advertising with Google AdSense. Google as of last quarter (Q4) did $1.2B in revenues on AdSense alone. Yahoo! and Microsoft has yet been able to launch a viable competitor to this. Both programs have been in a limited “beta” for over a year. Google’s decision to purchase Applied Semantics ($120M in 4/2003) and as a result create a contextual network beyond search is a defining moment in my opinion.

By: ronald

ronald — Wed, 18 Apr 2007 16:04:08 +0000

I’m not a marketing guy so take this with a barrel of salt.
Aren’t banner ads for things I don’t know I need. Generating general interest and brand awareness.
While text ads or search ads are for things I research and most likely to buy any time now, I’m actively searching.
Now wouldn’t it be the next step to target me with banner ads for things I might look for next, based on my online info.
Combine address info (got that from maps) with info about avg. income in the area, mortgage info (you don’t type in your starting addr. for directions do you, just to see how long it takes to get there), some financial info from email you got or spreadsheets you created online, or just plain who you communicate with. And it becomes pretty clear that I need an F40 :-) since my neighbor has one. Actually I’m looking for a Mountain bike, which Google knows by now.
It’s all about digging ehm data mining (digging sounds so dirty), and I’m afraid Yahoo has no clue. Otherwise they would have used their mail,maps, stock look up info, a long time ago.

By: Prasanna

Prasanna — Wed, 18 Apr 2007 14:38:12 +0000

Well researched and well thought out article.

By: Raindeer

Raindeer — Wed, 18 Apr 2007 12:50:17 +0000

Banners or text it's all the same and not the issue. The online ads market is dominated by the following cycle.

Advertisers choose the ad networks who combine the widest coverage with the best targeting of ads. They are willing to pay more for ads if the ad network can generate more impressions/clicks/conversions. Website owners choose the ad network that generates the most revenue. (Just Ask OM)

Google has a wider coverage than Yahoo in sites to place advertising on. Googles ads have more eyeballs per day then Yahoo. Google targets ads better than Yahoo. Google generates more clicks and conversions and more money per click/conversion. Ergo, if switching costs are zero. If GigaOM can switch within the hour from Google to Yahoo and back again. Why would OM switch from Google to Yahoo? Well only if Yahoo generates more money for Om. And why would an advertiser use Yahoo. Only if Yahoo generates more business.

It seems that at the moment Yahoo is not generating more income for both website owners as advertisers and Panama hasn't helped.

Now if only Google would introduce my Adsense for Charity idea to allow people to share a percentage of their Adsense income with charities and open source projects :-)