Yahoo Three Year Plan Analysis
Display Advertising Opportunity
Currently, Yahoo is a long way behind in several market, but they seem to have a great opportunity improve in this area. In the first slide attached to the previous article it states that the top 2 players control more than 90% of the search market, whereas in the display advertising market, the top 10 players only control less than 25% of the market. Hmmm. This being said there is a great opportunity for Yahoo to control this market as there are no real dominant players.
Additionally, I can see Yahoo taking a keen focus on the markets with very high CPM rates, such as classifieds, search and online video. The online video acquisition not too long ago of the Maven networks has now been justified.
Currently, Yahoo also has a strong presence in classified sections, in terms of jobs and autos, but there are more targets they could approach in this area. Craigslist comes to mind. The site is still currently owned by Craig Newmark with a 25% stake owned by eBay. This could be a potential target for Yahoo to quickly expand their growth in this area.
The second area which currently has a strong CPM is search. Yahoo is currently second in the search race, but are really a long way behind in search marketshare itself and more importantly being able to provide unique search sales services. This was supposed to come from the Panama service, but it has never really been upto standard. With the Panama system Yahoo estimate they can reduce the gap between the industry leading RPS and their own by 30% in the US in the first 9 months of 2007. I simply just cant see this happening.
CapEx and Investing:
Yahoo plan on investing aggressively and spending $2.6 billion cumulatively from 2008-2010. The are focused on Display Advertising, Grid expansion, relevance and experimentation. Hence, you will see Yahoo purchase some strong display advertising network in 2008-2010, my bet is a ValueClick purchase. Valueclick is one of the larger ad networks still left independent and they have a strong focus on display advertising.
Innovation inside Yahoo:
Im very interested to see how Yahoo Buzz progresses. It has been reported about a lot in the last few days about how much traffic the site is pushing and im keep to see this expanded, but not expanded too much. Quality rather than quantity.
Revenue Increase: Are They Realistic?
Yahoo is projecting revenues after traffic acquisition costs (TAC)—i.e., what it shares with other Websites that run Yahoo ads—to grow from $5.1 billion in 2007 to $8.8 billion in 2010. Yahoo also argued to its board that it could exceed Wall Street expectations and accelerate revenue-growth to 25 percent in 2009 and 2010 and increase its operating cash flow from $1.9 billion this year to $3.7 billion in 2010.
Are these figures realistic?? We can only wait and see!
