Technology

More Bad News For Yahoo! (YHOO): Display Ad Market In Trouble

Recent data on advertising buying patterns show that online marketers are moving toward search advertising and away from display ads. Some of the numbers are more than worrisome.

The New York Times writes that “The prices paid for online ads bought through ad networks dropped 23 percent from March to April, according to PubMatic.” The figure borders on being extraordinary.

One of the conclusions Wall St. should bring from the data is that big internet companies which paid for display ad serving and network firms will end up having spent too much money.The signature deal in this part of the industry was the buy-out of ad network DoubleClick by Google (GOOG). The irony is that Google is doing well in its traditional search marketing business, but its M&A strategy may turn out to be very wrong-headed.

It also means that Yahoo! (YHOO), which gets a large portion of tis revenue from display ads, may not be able to defend its current market valuation.

Online marketers hoped that, over the next few years, the demand for video ads and other rich media online marketing would create a renaissance for the display ad category.

Instead, the display market may be on the terminal list.

Douglas A. McIntyre

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