What does Yahoo's ad slump say about the health of the online ad market? Nothing, say analysts. Well, not exactly nothing, but Yahoo's decline in display advertising simply means the demand for
Yahoo's inventory is lessening. Other compelling players have entered a market that badly needed new, high-traffic quality competitors to the big Web portals. Oh, and it is true that automotive and
financial-services advertisers are cutting back on their ad spending, but online advertising is still booming. Shar Van Boskirk, a senior analyst at Forrester Research, predicts that online
advertising will reach $17.4 billion this year, from $12.5 billion last year. That's healthy growth by any measure. Equally healthy is the fact that ad dollars on the Web are no longer just going to
Google, Yahoo, MSN and Web search. But display advertising is no longer the only option for advertisers. The rise of YouTube, News Corp.'s MySpace, and online gaming means that advertisers have more
options than ever before to reach different types of consumers. While certain factors touched on in yesterday's
OnlineMediaDaily are Yahoo-specific, analysts doubt online players like Google
will run into the same problems. Merrill Lynch analyst Justin Post said in a research note that he believes Yahoo's failure in search is actually Google's gain. "Google is taking away some of Yahoo's
ad dollar." "We are still waiting for Google's results, but we are predicting search [advertising] volumes will continue to grow nicely." However, there is no question that in certain verticals, like
auto, financial-services and real estate, marketing dollars are being cut back as these industries enter slowdown periods. "Which means Yahoo could be a harbinger for other media," says
BusinessWeek. "And if things don't improve, advertising revenues across the board could take a bigger hit--leaving Yahoo with plenty of company."
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