<<I disagree Yahoo is the king of the internet. >>
Well, if they are king of the net now, why aren't they making significant revenue?
How many people have to be using the net for them to make any significant revenue?
<<Think about it -- ask most people what search engine they use Yahoo is the most common answer. >>
Actually, most of the people I know don't use Yahoo , but that means NOTHING.
I am basing my information on data supplied by companies such as Media Metrix and net Ratings. These are the companies that the advertisers use to determine who is using what, not "Rays Friends".
<<The real potential for revenue is advertising, not individual sales. Other co. make their money on individual sales, but the quick and low cost way is thru advertisement. Look at TV >>
As for the TV comparisons, Yahoo is already valued at more than all the television networks.
Why shouldn't Yahoo be worth three times more than the Fox Network? Why would an advertiser want to advertise on Baywatch or the Super Bowl when they could have a banner ad on Yahoo chat? BTW.... Baywatch has a greater audience than the ENTIRE internet.
( Steve Case pointed that out recently in a speech)
Interesting, when they talk about a television rating they are talking about 30 minutes. If you wanted to reach 25 million people on TV you can run a 30 second commercial on a popular television show. In order to reach 25 million people on Yahoo, you would need to buy a banner ad on every single page for the entire month.
This is an excerpt of a post I made back in January on net advertising. It is interesting, because since that time Ad Age ran a story about how Proctor and Gamble said it wouldn't pay the stated CPM rates that the web sites are asking. They said they would only pay 5.00 per CPM. The web sites are trying to ask for as much as 70.00 per CPM. Advertising is a commodity.
<<5) The finance area and the message boards are in the cheapest rate category.
These appear to me the most popular areas on Yahoo. BTW, the Motley Fool charges more to advertise on their site than Yahoo does to advertise on its finance section. Rates on the other portals are comparable to Yahoo's, but it appears that most other sites are more expensive than the portals.
That is why most magazines are not "general interest" anymore, but have targeted audiences. If you are selling fishing gear, you are more likely to want to run an ad in a fishing magazine. So a "Motley Fool" type site will always be able to charge more than a general interest site.
6) Yahoo is in the business of selling banner ads. What you see listed as "selling and marketing" expense on their financial statements, isn't just the cost of Yahoo promoting its own web site, the bulk of it is the cost of Yahoo running their sales offices. They have various sales offices inside and outside of United States. Just like magazines and newspapers do, they will need to seek out and maintain their customers. The cost of this isn't
cheap. They are cold calling accounts and telemarketing in order to get business. Keep in mind, that their employees only have a limited experience in this area since it's a whole new venture.
7) I check out Yahoo's advertising every few weeks. I click on various different areas to see who is advertising there etc.
What I have noticed is that the majority are "web companies," garden.com;
Amazon.com ; CD Now; etc.
From time to time I see others advertise there, but they don't seem to stay.
I saw a Walmart ad for a few weeks, but I never saw it again.
8) Advertisers are very results oriented. There is a misconception that they just throw money at anything. If you have a business, you are going to want to see a measurable result. Magazines have had years to establish their advertising clientele. They also are special interest and work to promote the customers product. I will show you an example:
If you look at a woman's fashion magazine, you might not be sure what is the magazine content and what is the advertising. It's designed that way.
The magazines editors will tell their readers that long black sleeveless dresses are the rage this season, because that is what their advertiser is selling. They also have very good demographics to give their advertiser. They know exactly who is reading their magazine. The names and addresses for the subscribers are legitimate, and they have specific breakdown also, on exactly where the magazine is sold from a newsstand. They can include a rip
out coupon in the magazine that is coded, and they can know exactly that someone from a given area ripped out 1.00 off coupon and bought a box of Tide.
Proctor & Gamble is one of the biggest advertisers in the country, and to date they have done little internet advertising. Unless they can be shown how it will sell a box of Tide, they won't use it.
9) In some ways the internet has big disadvantages from other areas. Advertising through postal mail is acceptable, spam is not. The ISP's don't even allow spam.
The internet didn't start out as a commercial venture (unlike TV) so there will always be those that oppose and will attempt to limit how they see it used commercially.
There are various privacy groups that are pushing for laws to limit what kind of information can be gathered from online users. Right now it is mostly voluntary.
So its okay for my grocery store to track every single item I buy in a year,
( through the discount card) but they don't want an online company to know my zip code.
10) This month, Yahoo's market cap made it the 82 largest company in the United States.
I have looked very closely at its business. Yahoo would have been a nice little business, but I wonder if we are now beyond that stage. The expectations that the Yahoo bulls have for this company, are not within Yahoo's grasp. I saw this happen with Netscape. Wall Street handed Netscape a huge market cap, without letting the company just grow at its own pace. It's like sending a 10 year old child to college, simply because you think they have
potential.
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