Bad News from Yahoo

Several people have submitted stories about the bad news that Yahoo released today (it seems appropriate to link to the story on their site). They appear to be having the same difficulty with ad revenue that is hitting everyone else. It's not a good time to be dependent on revenue from dot-coms that are themselves struggling to stay afloat.

Comments

Why ads suck

[theancient1]

Most people don't like ads, so they get ingored. Why don't people like ads?

• 90% of them look like they were slapped together in 2 minutes. A cheap-looking ad does not inspire confidence in the quality of the site behind the link. Every ad I remember clicking on looked like it was made by a professional graphic artist. Yes, computers are capable of displaying more than 16 colours.
• No originality. Oh look, someone else is trying to make their ad look like a Windows dialog box. It was cool the first time, now I just ignore them.
• Animated garbage to catch our attention. Whether they be dancing credit cards, animation in a fake windows dialog box, or just a flashing background -- almost all animation is there just to get my attention. Well, it works -- I say, "my god that's annoying", and scroll down the page without a second thought.
• Misleading messages. Click the fast-moving object and win a prize! Okay, maybe this belongs under item 2, "no originality"
• Unclear messages. A surprising number of ads don't give enough of an idea what you'll get by clicking. In the beginning, this was a marketing tactic -- "hmm, I wonder what this means... maybe I'll check it out." I admit, I did it myself. Now, it's so common, it's not worth our time to look at every obscure ad.
• Dislike of interruption. Unlike traditional media, the internet is interactive. While surfing, I have a "plan", if you will. I know where I want to go next -- and it's not to that advertiser's web site. The ad has to be more interesting than the other content on the same page. It doesn't help that most ads cause the page I'm currently reading to disappear.
• Lack of other interesting ads. If 98% of the ads aren't worth my attention, my eyes will be trained to automatically ignore the ad.
• Untargeted ads. A corollary to the above, most of the ads I have zero interest in even if I did notice them. Online casinos, credit cards, some shareware program -- I'm not interested in any of these things.
• Perception that ads are annoying. Corollary 2: popup windows, animated visual pollution, and the rest of the above -- all contributing to the notion that ads are a scurge that should be ignored.

not just anyone can make a banner ad

[Have Blue]

Whether you like to admit it or not, advertising is a science (to a certain extent). There are things that work (psychology of color) and things that seem good but are wrong (grabbing attention with the blink tag). Banner ads are becoming much more aggressive, with the flashing and the fake error messages and the java applets and the monkey punching. If I see a banner ad that tries to get in my face and force me to look at it, I block that adserver (and their revenue). If I see a calm, nice-looking banner ad that actually informs me about the product, I leave it alone; hell I might even read or click it.

Yahoo and all the other struggling companies should try setting some standards for banners they will run. The banner industry is killing itself by failing to see that they are pushing the consumers away.

Re:Good long-term for Tech Industry

[PD]

My favorite bad idea is www.swiftboard.com. They give out free keyboards with an extra row of buttons labelled "shopping" "games" "clothes" etc. The idea is that they get everyone to install their keyboards and a Windows driver, and whenever people want to buy something they will just hit the "shopping" key.

They keyboard has a regular PS2 connector, and it works great with Linux. It's slightly on the lightweight side, but as far as keyboards go, it doesn't have a bad typing feel.

Thanks, www.swiftboard.com! So sorry about the sucky business plan!

It's not just about banner ads

[fm6]

Yahoo is being hurt by the decline in the banner ad marketplace. But that's not the whole story.

The basic fact is, Yahoo is badly run. I've posted previous rants about their software's shortcomings. I had assumed that they were profitable anyway, but I appear to be mistaken. The report that they're in trouble completes a familiar picture.

Yahoo was the first big Dot Com, and thus the first target of overenthusiastic Dot Com get-rich-quick hysteria. Now, if anything is bad for a company, it's having a lot of over-eager investors throw money at it. The company has to grow quickly, regardless of the negative effects, in order to justify all that investment. Plus, management has no incentive to control costs. So you get growth-by-acquisition, overlapping projects that don't complement each other, initiatives that are ramped up before they are fully debugged, etc., etc.

If I were a Yahoo investor, I'd be terribly concerned. But as a Yahoo user, I'm actually kind of encouraged. Yahoo is too well-established to follow Infoseek into Portal Oblivion, and this kind of reality check will make for a better operation.

__________________

Slashdot Ads - How about a poll?

[n3bulous]

I doubt slashdot would run this poll, but how about:

Slashdot Banner Advertising:

a) I have clicked on /. ads.
b) I have research a product/company after viewing/clicking on an ad.
c) I have bought something from the advertising company because of (one way or another) the ad.
d) JunkBuster!

The economics of banner revenues

[alewando]

Kuro5hin has an interesting piece on the economics of ad revenues. The bottom line is banner revenues can be sufficient for profit potential if you play your cards right. Popular sites like slashdot have a high enough CPM to stay more than just afloat. I'm surprised Yahoo hasn't been able to say the same.

Re:The economics of banner revenues

[TrinSF]

Actually, no. The article on K5 is still overestimating the revenue from targetted banner ads, because he's basing his estimates on published rates currently available.

Unfortunately, those rates don't mean anything in the current advertising climate. I used to work for dot-com with a revenue stream based almost entirely on advertising revenue with targeted banner ads. (I say used to because they had to lay off half their staff in January, because of the CPM rate crash.)$20 CPMs were possible a year ago, and $6-10 CPM's maybe 6 months ago -- but right now, CPM rates are so low, that even for targeted banner ads in higher-than-average click-through settings, they're still barely breaking $1.00 CPM. 60 *cents* isn't unheard of.

So, redo the math, reducing ad revenue by a power of 10, (because of his inflated CPM rates of $4-10) and you get more in the ballpark. Further, advertisers are trying to push towards an entirely per-click payment model, which can be quite abyssmal, revenue-wise -- and doesn't take into account all we know about the value of brand recognition over time, etc.

All you have to do is graph the decrease over the course of a year, from $20.00 CPMs to 60 cent ones, and you'll see why Yahoo's in trouble.

I've got a solution:

[Sarin]

Perhaps they should make their banners bigger..
Just a though.

Good long-term for Tech Industry

[Skyshadow]

The death of all these .coms is actually a good thing, long term, for the tech industry.

Consider: 98% of all the .com businesses were either terminally bad ideas (delivering pet food) or way overfunded. Since there is only a finite amount of venture capital out there, the fact that donkeyhumper.com was getting 10 million in funding meant that some other business was not. Hopefully, this downturn and the death of most .com businesses will mean that VCs will start investing money in relistic (as opposed to trendy) businesses.

This goes hand-in-hand with the need for the VCs to be a little more careful with their money -- even deserving tech startups have spent the last few years flushing money down the toilet in a way that would make any other industry blush; do we really need on-site wine tastings?

Anyhow, this downturn will hopefully bring the tech boom a bit closer to earth and, in doing so, ensure that the economic good times stay with us a bit longer.

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Yahoo

[pb]

I remember Yahoo fondly from the early days of the web. Back then, it had a well-structured directory of links that was maintained by hand. It was a quality site, and had links the vast majority of useful sites for a given area. It was a lot easier to go to Yahoo to find something than it was to click your way down whatever path you were used to, going through maybe six sites instead of one.

However, times have changed. Now Yahoo is yet another Cheesy Portal Site, and you'll notice that the article is entirely about their stock price, their public perception, their CEO, blah, blah, blah... And nothing about their customers, their technology, and the useful service they provide.

That's because they don't provide a useful service anymore. Instead, they're partners with people who do provide a useful service. After the web started getting too large for Yahoo to handle, AltaVista became popular. It was a showcase for DEC's Alpha computers, showing how powerful they were by how they efficiently searched and indexed millions of web pages, and found your queries. The best part about altavista.digital.com, though, was the query structure, for instance being able to say "+host:slashdot" and search for posts...

So, for a while, when Yahoo needed a real search engine, they used AltaVista's, I believe. I'm not sure because by then I had switched over to AltaVista anyhow. But that too eventually turned into a cheesy portal site, although it looks better recently. However, now Yahoo uses Google for their searching, as well as having their own tree of links that people submit.

Google, however, actually *does* have innovative technology, and hasn't sold out quite yet. They also use the Open Directory project as the basis for their web directory, and have a high quality tree of links reminiscent of how Yahoo used to. But the really useful features are their "PageRank" technology, which takes links into account when indexing, and their Cache, which often is the only way to find things that have been taken off the web.

So, sadly, new useful web sites will often give into the money, and their quality will go downhill. (not mentioning any names here ;) But that seems to be the way the world works, and all we can do is cultivate the young upstarts to bring us the technology of tomorrow, so we can enjoy today again.
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