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Yahoo, AOL Homepage Ad Gains Appear To Stall, As YouTube Diversifies

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Although display advertising growth is as strong as ever, efforts to draw more advertisers to lucrative homepage ads fell flat in Q2 compared to Q1, according to a research note from Macquerie analyst Ben Schachter, who’s been providing a twice-quarterly rundown of landing page ad activity at the top portals and YouTube (NSDQ: GOOG) for the past year. Part of the reasons for the general slowdown in homepage ad growth is due to the mixed results for two of the most aggressive sellers of homepage ads, AOL (NYSE: AOL) and Yahoo (NSDQ: YHOO), during the quarter.

Part of the problem in Q2 is that daily deals sites like Groupon and Livingsocial have been the marketers taking the most advantage of the portals’ premium ad space instead of larger brand companies who would likely spend more on campaigns. Unless the portals can attract the more lucrative packaged goods, pharma and auto advertisers, the promise of more creative, engaging homepage ads may not materialize. So far, it looks like daily deals ads will continue to be strong over the next few months as competition among the services heats up. That could raise CPMs, assuming demand from marketers in other categories is there, but given the relative newness of these ads, it’s still largely experimental for major advertisers.

Here’s a summary of Macquerie’s look at the individual companies’ activity in Q2 versus Q1:

— While AOL lost little momentum in the second half of 2Q, things are still moving in the right direction. Compared to its portal rivals in 2Q, AOL had the highest proportion of higher-priced oversized/custom ad units at 24 percent. Still, Schachter finds little benefit from large, Project Devil, which still hasn’t shown much on the homepage. Additionally, AOL was the least exposed to the daily deal marketers.

— Q2 was more mixed for Yahoo’s homepage ads. On the plus side: higher-priced Oversized/Custom ad sales picked up in in the second half of the quarter. Overall, however, Yahoo sold these units only 16 percent of the days (down from 22 percent in Q1). Login page ad sales did rise, as Yahoo sold ad on that page 38 percent of the days during the period, up from 24 percent the previous quarter. Incidentally, Yahoo had, by far, the largest concentration of daily deal ads in the second half of the quarter.

— Speaking of demand, YouTube has been doing pretty well over the past few months in selling its “masthead” display unit. The Google-owned site is able to sell a masthead ad practically every day. On top of that, it’s making significant progress on is diversifying away from YouTube’s over-reliance on media companies as advertisers. Media marketers accounted for 42 percent of homepage ads for Q2, down from 60 percent over the past three quarters. Some of the categories who have appeared in the masthead ads included marketers in the consumer packaged goods, autos and telecom spaces. YouTube had the highest degree of CPG advertisers across the four sites Macquerie analysed with 7 percent in Q2. The main reason for that is Google’s growing strength as a leader in the display ad space.