A re-evaluation of Yahoo

So, here's the question: is it time to stop bashing Yahoo? Project Panama, the protracted project which long symbolized Yahoo's vain attempt to catch up with Google in search advertising, has finally launched. Word is that its matching text ads to content better than expected. One agency, Avenue A, has told Bloomberg its seeing a 10% lift in the click rate on clients' ads.

A small change, with effects: an increase, it seems, in Yahoo's share of the search advertising market; a recovery in the Sunnyvale giant's depressed stock price; and a pick-me-up for Terry Semel, Yahoo's torpid chief exec, who's now going around telling everybody how happy he is. Should we be happy for him?

It's surely the best news for Yahoo in a while, and we'd love, in principle, to find another big company to prod. But it doesn't change the basics: Yahoo makes less than half what Google produces in revenue for every search query; it needs much more than a one-off 10% lift in clickthroughs if it is to challenge Google's strengthening grip on the search market.

The narrative remains the same. Yahoo wasted time schmoozing in Hollywood while allowing two Stanford students to build a better search engine. Google has eclipsed Yahoo. Terry Semel's failure is not absolute: Yahoo is growing much more strongly than most media companies. But it is relative. Yahoo, not Google, should have owned the internet.

2:50 PM on Fri Mar 23 2007
By Nick Denton
2,711 views
6 comments

Comments

Doug at 02:33 PM on 03/23/07
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Should be we happy for them? Absolutely. Be we shouldn't have had to feel bad for them in the first place.

A 10% uptick in click rate on a clients' ads as reported by one agency doesn't exactly play catch-up for the years they've spent lost in the woods.
TheTypeset at 02:43 PM on 03/23/07
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I guess I don't know the full scope of it (including all the failures), but I feel like their acquisitions have been so much stronger: Launch, Flickr, Del.icio.us- doesn't that count for something when Google snaps up YouTube and Writely?
trevo at 04:45 PM on 03/23/07
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@TheTypeset

Its interesting that when Yahoo failed to buy YouTube and Facebook, there was so much criticism of Semel being slow and "out of touch".

Now that we're seeing the value of YouTube implode and Yahoo!'s advertising technology efforts gaining ground, Yahoo is now being seen as prudent and smart.

Personally, I'm rooting for Yahoo! cause I just can't stand Google's hypocracy :-)
mtalinm at 06:54 PM on 03/23/07
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since when is Valleywag about GOOD news? more like a CNET mirror every day...
SEARCH ENGINES at 10:31 PM on 03/23/07
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The Real challange is for Yahoo to make their organic SERPs as overall relevant as Google's
Rockwell at 07:30 AM on 03/24/07
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"Yahoo is growing much more strongly than most media companies."

Yahoo grew earnings last year by 4%, which I assume is below the rate of growth of the average media company.