Yahoo faces weakening ad business

17Oct11

An article in the Wall Street Journal provides a great illustration of the nature and volume that advertising has in online media. While Yahoo is in the process of shopping itself to other buyers, it experiencing major declines in ad businesses. The company’s display-ad business is said to be a major asset, and it is currently searching for ways to turn this decline around to make itself a productive prospect for potential buyers. As Chapter 4 of MW points out a sharp decline in global ad spending, Yahoo is looking for innovative ways to revamp its ad business in order to prevent a total sale off.  For instance, Yahoo has created an “agency development team” of more than 20  salespeople dedicated to each of the major ad agencies (wsj.com).

According to WSJ, any weakening in Yahoo’s $4 billion annual ad business may have implications for  how salable the company is. Yahoo’s display-ad business, including graphical,  interactive and video ads, generates 40% of the company’s overall revenue but  only grew 5% year over year in the last reported quarter– a sharp slowdown from  double-digit growth rates in prior quarters.

The article goes on to provide some very insightful information regarding the state of the US ad industry; increased more than twenty percent. Yahoo is currently cutting ad prices to appease its major ad clients and changing the look of its home page to be more appealing to site users. This is pretty much an adaptation in the increasing availabity of cheaper ads, through web companies such as Facebook and Google. Furthermore, it is a clear indication of the ever changing ad industry and how media consumers impact a myriad of aspects related to advertising, especially online advertising.

Read more: http://online.wsj.com/article/SB10001424052970204346104576637191238440646.html#ixzz1b5F5xfY7

 

-Isabell Rhenwrick-

 

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