YHOOuch (continued)

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YHOOuch (continued)

If anyone ever doubted the value of blogging to public market investors they should read the comments to my post this morning on YHOO.

Here is a sampling:

Behavorial Targeting has really opened up these two industries (more than others) as to the power of RETARGETING consumers on inventory, that is just not as expensive as portals....

Thus, when a large company with a "considered purchase product" (like auto or mortgage) is faced with a choice on HOW BEST TO SPEND MONEY ONLINE ---- the highest CPM placement will often times lose...(unless they see their consumers at a higher frequency than others)

this is one scenario where portals and large branded websites (with high CPM's) will lose and not be able to compete.

It's about ROI - and the auto makers (and their agencies) understand the value of media and technology online, more than most verticals...

Posted by: andy

AND

Yahoo has huge problems that will not be soon corrected.

1. our customers spend $30M a year on Google and only a fraction of that on Yahoo because Y!'s management systems are so messed up;

2. internal Yahoo product development and management on the search engine ad side is in a shambles, and they can't find their way. You can bet that Panama will be delayed again. We have had many meetings with Y! tech people over the last 18 months to try to make our product work for our customers on Y! and have gotten nowhere, meanwhile at G, everything works like a charm. So the money flows to G and away from Y.

3. IF Y! could fix their problems they could take back a lot of $$'s because all my customers would love to diversify away from G a bit and spend more on Y!

Posted by: Joe Agliozzo

AND

We spend > $2.5 million a year on Google and Yahoo can't manage to show enough ads to clear even $50K from us. We put in the same keywords for both, so ...

Time to clean house at the exec level at Yahoo.

Don't be misled by your cashflow analysis. They will keep finding a way to disappoint. I remember buying 3Com on similar cashflow basis in 1996-7. That was a genius move alright - NOT. This is not to say that I would buy Google at these prices (Cisco is back at 98 prices now, so Google in 2014 could be still at $400), just that Yahoo isn't the bargain you think it is, considering they are losing altitude rapidly.

Posted by: James

If you want to know what's going on in the trenches, just ask. And they will tell you. Anyone who buys and sells stocks, particularly tech/internet stocks and doesn't read blogs are really missing out.

I didn't get around to placing my buy order on YHOO today and guess what - I am rethinking it.

Thanks Andy, Joe, James, and everyone else who left a comment. You are the best!

September 20, 2006 stocks , Venture Capital and Technology | Comments (13)

Comments

Panama promises to resolve a lot of "management issues" but I have to say it doesnt look like it will ever catch up with Google. It's hillarious to hear that Panama is going to have a certain feature, because you know everyone in the room thinks "ahh, you mean like that google feature right?" the inevitable answer is "well yes, but a bit more limited than the google one"

Yahoo has resorted to copying Google features and esentially trying to play catchup; a poor strategy unless you can somehow attract a lot of talent (and we know where that is right now)... When Y! takes one step forward, Google takes 3 leaps... it's sad but its true...

Posted by: somemarketer | Sep 20, 2006 10:34:00 PM

Fred, you need to have some polls. I've been doing PPC for the past few years with clients, and I think anyone that has dealt with Yahoo's PPC platform would unanimously agree that it SUCKS. And all this talk of Panama (which will replace Overture's DTC) -- Does anyone remember who *was* at it with PPC before Google? Answer: Overture, which Yahoo purchased many moons ago. OK, so Google discovered (at least a year ago) that the way to maximize revenues was not taking the highest bidder on a keyword phrase, but rather the most clicks X (times) keyword bid. How does it take Yahoo *this long* to catch onto that as well? That's part of what Panama will be doing to Yahoo, which currently just places advertisers in rank of highest bid (but the relevancy of the ads can lack, resulting in less clicks overall).

And last but not least, what about Yahoo's Publisher Network? This thing is still in beta. In my opinion, this was the BIGGEST mistake out of the handful of 'em that Yahoo made -- Google has AdSense on how many blogs/websites now? Bloggers/webmasters manually updated their blogs/websites with Google's code for AdSense; it'll be a *tough* sell to get those people to go back into their code and switch that out for Yahoo's code (whenever they get out of beta and open it to the public). So, still in beta -- how long has AdSense been out? 3 years? 4? Ridiculous how you can lead the pack (w/Overture) and let years slide by where your competitors are evolving in the area that is your LARGEST REVENUE STREAM (ppc ads).

Posted by: Steve Poland | Sep 21, 2006 2:19:19 AM

I had to turn my comment into a full post, here.

Posted by: Steve Poland | Sep 21, 2006 3:04:01 AM

I totally agree. It is noteworthy that Hedge Funds and Institutional Investors are buying services like Monitor110 (http://www.monitor110.com/) in addition to traditional information providers like Bloomberg .

(buy the way Draper Fisher Jurvetson invested in Monitor110)

Posted by: Daniele Della Seta | Sep 21, 2006 3:38:04 AM

If you don't want to buy more YHOO you should either a) sell your position or b) go short or c) buy GOOG to diversify

Posted by: Drew Robertson | Sep 21, 2006 8:40:22 AM

Cool product there Drew at callinsearch

Posted by: howard Lindzon | Sep 21, 2006 10:25:20 AM

From a user perspective - where are my eyeballs going ? I really like Yahoo's tools, like My.Yahoo, Flickr, and their content overall - over anything else, like an AOL or a Microsoft right now. I don't know much about ad placement technologies, and at the end of the day investor sentiment may be based on the popularity of the service/content just as much as it is on revenues coming in.

Now that being said, there are some really weird things I just don't get about Yahoo! For instance, this week, Yahoo offered up it's Current TV product. Some interesting stuff, I like it's design, etc. But when I type current.yahoo.com or currenttv.yahoo.com into my browser - NADA comes up. You think they would have created an easily accessible URL to get to their new hoopla-la-lade web site, Yahoo Current TV. But they didn't. Bad move - could hurt the ability of the site to get some traction. Oh well.

http://video.yahoo.com/currenttv

But why not current.yahoo.com ??

Posted by: Chuck Fishman | Sep 21, 2006 10:34:00 AM

Hi Fred,

Great point again about the value of blogging to public market investors. There's a lot of great viewpoints out there. At the same time there's a lot of non value added blog posts and comments. Unfortunately more of the latter than the former in my opinion.

I think a big challenge and opportunity is for somebody to develope a search engine that seprates the wheat from the chaff and tags it so that time constrained professionals can focus their attention on the value-added pieces for the stocks / industies they cover.

Posted by: Bill Davenport | Sep 21, 2006 12:18:10 PM

Bill,

check this: http://www.monitor110.com/

Posted by: Daniele Della Seta | Sep 21, 2006 2:59:49 PM

Google has a tech-based market advantage that is probably unstoppable. Yahoo can be viable, just not the way they have been.

Posted by: Troy | Sep 21, 2006 5:04:55 PM

Or you could just the that fugly chart tell you everything you need to know. The trend is down!

Posted by: Michael | Sep 21, 2006 6:12:21 PM

Thanks Daniele for the Monitor 110 link. Hadn't heard of them yet and it looks like a very interesting company.

From what I've read it sounds like they're trying to 100% automate the filtering mechanism. I'd only suggest that this process can't be 100% automated and there is a big role for some human filtering / rating / tagging in there.

Posted by: Bill Davenport | Sep 25, 2006 1:36:23 PM

There's a lot of cool stuff happening at Yahoo!, but it seems that Wall Street doesn't care about that -- they only want to know if Yahoo! will beat Google at the games Google invented.

In the meantime, Google is failing to gain market share in any of the products where Yahoo! shines.

So, why are the two companies measured with the same yardstick?

Posted by: J.D. | Sep 26, 2006 6:31:11 PM

A VC

Musings of a VC in NYC