Drop In Display Ads Will Hit Tier Of Sites Below Yahoo!
July 20, 2011 by Douglas A. McIntyre
Yahoo! (NASDAQ: YHOO) said its revenue fell last quarter to a large extent because of a drop in its display advertising. The trend will spread to other websites with smaller audience size than those of Yahoo!, AOL (NYSE: AOL) and MSN. The three portals are among the largest sites in the U.S. by visitors. There are several nearly as large that will suffer the same trouble.
Yahoo! revenue fell 5% in the second quarter compared to the same period last year to $1.1 billion after traffic acquisition costs. The company said sales force changes were partially to blame. Industry data show otherwise. Facebook now has over a quarter of the total display inventory in the U.S. Two years ago, that share was close to nothing.
Not far below Yahoo! in size are Turner Digital, Viacom Digital, CBS Interactive, New York Times Digital, Fox Interactive, Gannett’s online sites, and Time Warner Interactive. Among the properties owned by these companies are CNN.com, MTV.com, USA Today online, ESPN, CNET, The New York Times, and FoxNews.com. The parent firms of all these websites count on them to have enough ad growth to offset the attrition in print and TV sales. Some of the sites carry modest amounts of search advertising, a business that remains healthy judging by Google’s (NASDAQ: GOOG) earnings. Most, however, rely very heavily on display.
It has already been noted in the press that digital advertising has seen its best days. There is a hope that video and other interactive marketing will replace them, but these ad media are still a small part of overall display inventory.
What is visible in Yahoo!’s results now will become clear in the financial results of other companies with large websites. The tier of online properties just below Yahoo! in size are in trouble.
Douglas A. McIntyre
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