Yahoo Warns of Slowing Internet Advertising Sales

narramissic writes "Yahoo chairman and CEO Terry Semel warned that a slowing U.S. economy is starting to impact ad sales, particularly in 'autos and financial services.' But Yahoo was careful to note that it cannot tell whether the current slowdown is a sign of broader trouble or is limited to ads from the auto and financial sectors."

Comments

Boo Hoo

[DreddUK]

So everyone sells Yahoo! stock, because the growth is slowing, not because sales are decreasing. So this implies that the growth calculations were agressive, not that there's anything directly wrong with ad sales.

Advertising sales from both sectors have slowed down during the past three to four weeks, although both remain on a growth track. "They're growing, but they're not growing as quickly as we would have hoped at this moment in time," said Semel.

Quicker damn you, grow quicker...

Less auto/finance ads ... are bad?

[UbuntuDupe]

Sorry for being a cynic, but I don't see how a decrease in financial services or car ads are a bad thing.

1) Cars: auto sales are currently a big cartel. Every state has regulations stopping or significantly shackling internet sales of new cars. All that auto dealerships now offer you is the degrading process of "oh, gee, I dunno, I'm gonna have to talk to my boss about that offer you just made" and "here is a payment plan we can offer you in which I'll only talk about the monthly payments and hide the effective 14% interest rate that amounts to".

2) The financial services industry basically revolves around convincing people to invest with them to "beat the market". They thrive on artificially increasing the complexity of investing. I've had a financial advisor tell me that my investment plan is going to look "totally different from the guy in the next cubicle". Yeah, same age, same investment horizon ... whatever, dude. In reality, most of them can't "beat the market" and all you get is the honor of paying them usurious fees for their stock-picking "wisdom".

We really do need less of these ads. Is there something bigger I'm missing?

hmm

[joe 155]

are sales slowing, or moving away from Yahoo? I know they've had a fairly poor showing as of late, is this just an attempt to try and explain that away within a more general setting and keep the share price up, hoping that people will see them still as a good bet? Still, I suppose that buying new cars might be one of the first things to take a hit if the economy was slowing, but wouldn't this spur advertising?...

Anyone have google's ad revenue relating specific to these areas?

Re:hmm

[Frag-A-Muffin]

Anyone have google's ad revenue relating specific to these areas?

Here's some data you can look at. Google looks to be doing quite well actually :) Maybe Yahoo is just losing to google more than they thought? :)

auto and finance both subject to rate pressures

[StandardDeviant]

Hmm, ad sales slowing down in sectors that are strongly sensitive to interest rate changes, at a time when interest rates have been ramped up by the Federal Reserve (who are only now starting to talk about slowing this rate hike campaign)? Color me somewhat unsurprised. A sharp dip in a few sectors is less worrisome to me than a shallower dip across the board. If the broader ad market begins to slump and does so for a few quarters in a row, yeah, it might be time to rethink all those old-but-new-again ad revenue dependent business models out there.

Hmmmm

[jasoneisen]

Sounds like someone's sales are slumping, and they want to bring the market down with them.

Gads, where does one begin?

[Penguinisto]

IANAE (and thank Heavens - my social life is geeked-up enough as it is), but why the doom-and-gloom over what IMHO is basically a short-term shift? (the US economy grew at 5+% the first quarter of this year, and 2.5% 2nd quarter)... (ref: here . I mean, seriously - if they were relying on year-to-year results to get a trend, okay... but quarter-to-quarter for a long-term forecast? Maybe I just don't grok economics so well, but it seems weird to me, to say the least.

Also, US Economy != World Economy, influences be damned. Is the global economy slowing overall, or no?

After RTFA, I think someone was trying to short some Yahoo stock more than make an accurate forecast...

/P

Re:Gads, where does one begin?

[TopShelf]

Don't take this story for more than it is. Yahoo is adjusting their guidance for the quarter downwards (at the low end of their range, not below it), and they note shortfalls in a couple major advertising sectors. There's nothing long-term about it, and they're tossing up a broader slowdown as a possible reason for their shortfall. That sounds like speculation more than anything else...

And yes, IAAE (at least that's what my degree is in, I don't work professionaly as one).

Re:Gads, where does one begin?

[Trailer Trash]

Whoever posted the article forgot to add that the terrible economic outlook is Bush's fault.

My fault

[misleb]

Sorry guys, this is all my fault. See, I block all ads. I'm antisocial. Forgive me?

Why advert with Yahoo when you can MySpace it?!

[wwiiol_toofless]

"Hi Y'all! I'm the Honda Fit. I'm totally spacious and affordable. My fav bands are the Chemical Brothers and O.A.R. Here are some pics of my fam, Uncle Civic, Granny Accord. Y'all, I'm 0.0% APR for 20 months!"

Two options

[MosesJones]

1) There is a downturn in Auto advertising and FS advertising
2) Yahoo are getting a smaller slice of the advertising pie

If you were the CEO, which option would you talk about?

Weak economy is a weak excuse from Yahoo!

[dougman]

While there are always "signs" that point to "weaknesses" in the economy, most of what is out there is FUD spread by the mainstream media. The reality is that the current administration picked up the pieces of the .com crash and 9/11 and has done a remarkable job energizing the US economic engine through tax cuts. I encourage you to read the following piece by respected economic advisor Lawrence Kudlow: http://www.realclearpolitics.com/articles/2006/07/ the_bigbang_story_of_us_privat.html

Here's a few points:
  - Did you know that just over the past 11 quarters, dating back to the June 2003 Bush tax cuts, America has increased the size of its entire economy by 20 percent?
  - In less than three years, the U.S. economic pie has expanded by $2.2 trillion, an output add-on that is roughly the same size as the total Chinese economy. (so much for the "China is going to surpass us anytime soon theory - ed.)
  - Since the 2003 tax cuts, tax-revenue collections from the expanding economy have been surging at double-digit rates while the deficit is constantly being revised downward.

Housing MAY cause some short-term pressures (though I think this will be more isolated than is being reported) but it certainly isn't going to cause the economy to come to a halt. Maybe Yahoo should take a look at Google's numbers which, if I'm not mistaken, are doing just fine on the ad revenue side. Perhaps Yahoo should take a look in the mirror before proclaiming this is a US economic problem. When all the indicators show that online advertising rates industry-wide are down for multiple quarters I'll listen. Until then, this looks like short-term CYA by a CEO to help explain why his SG&A and EBITDA are not meeting the numbers the analysts want to see next quarter.

I wonder what is included in "Financial Services"

[Distan]

I wonder what is included in the "Financial Services" category. Some posters seem to assume this is just all the online brokers. I bet it is more than that.

One of the most frequent (and annoying) class of advertisers I see on Yahoo are the seedy mortgage brokers, with all their ads for "teaser rate" interest only adjustable rate mortgages.

Now that the bottom is falling out of the mortgage industry, the brokers are getting more desperate for new suckers, er I mean "clients". There are less of those to go around and naturally the advertising is going to fall off.

Maybe Yahoo should just lift their prohibition against advertising porn. I bet they are leaving a lot of dollars on the table by not being willing to have a crotch shot on their home page. At least that industry is more ethical than the people who have been selling negative amortization adjustable rate mortgages on over assessed homes to people who least understand (and can least afford) what they were being set up for.