And the River Card is a Blank
Poker can describe almost any situation in life. And if the Yahoo, Microsoft dance was a poker hand, Yahoo just missed its inside straight draw.
The core revenue numbers were: O and O search +16%, Display +15%.
But all the search gains seems to be pricing (i.e. no query growth). From the call: “15% RPS gain goal. In Q1, we made that.” RPS = Revenue per search.
So on the whole, very lukewarm numbers and certainly not bastions of success. But this was the killer for me: International was up 7%.
The problem it seems is that much of international is levered to affiliate partnerships and not Yahoo’s owned and operated properties. Google is absolutely killing it outside of America and surely it’s only a matter of time before partners switch over to Google, who are able to offer them better rates. It also means Yahoo won’t participate in another huge growth driver as the online populations of countries the world over mature and the corresponding advertising dollars follow the maturity.
My take on Yahoo has been all along that they should give up on Panama, fire every person to do with it and switch over to Google for search monetization. They should not junk their crawler and organic search efforts. The two are not mutually exclusive.
They should refocus around remnant display and their grab bag of leading assets they’ve acquired, which seem to be showing some signs of life. And of course over-arching all of this, if they can’t grow queries or they can’t grow impressions, then they’re fucked anyway.
Given the assumed fat padding in the results to stave off Microsoft, on the whole the results are a little disappointing and certainly change nothing in the negotiating scheme.
Yahoo should now fold on the river. If they aren’t acquired in the next few months, then it will be by this time next year.
p.s. Also see Card’s write-up and an interesting point around a jump in fee revenue.
Nikki, great post. A couple of points from an ex Yahoo!
* Yahoo! was an international company way before Google but many years of international neglect left the door open for Google. Yahoo! have some stunning market share in Asian countries (Japan, Taiwan) but that’s not enough. The horse has bolted in many countries.
* Google RPS is so much stronger in the US and in another stratosphere in many international markets that more distribution deals going to Google is a fait accompli. Yahoo! just can’t compete on a rev share basis.
* Increasing RPS is a critical issue for Yahoo! but in the absence of an increase in search volume it’s nice but not a great.
* If you work at Yahoo! Search Marketing and/or on Panama then you should feel very worried about your role. Google or MSN will be monetising Yahoo!’s search inventory in time – one way or another.
Cheers
Pete