Yahoo announced today net income of $131 million and revenue of of $1.8 billion, a decrease of 18% and increase of 6% respectively. This is just days after Google released their Q2 earnings of $1.25 billion, up 35%, and revenue of $5.18 billion, up 39%. You can see the full WSJ article reporting on Yahoo via Google News.
While Yahoo is trying to keep their results positive in the face of the recent takeover attacks by Microsoft, Yang did point out that the slowing economy was having an affect on their business, just as Google did. He also reiterated its recent ad deal with Google that should increase provide a revenue boost to the company.
So what does this all mean for advertisers?
Well, like the MediaPost previously reported, SearchIgnite showed that CPC prices could increase 22% due to the Google/Yahoo deal. Basically, what’s good for investors is bad for us advertisers. If this deal gets the go ahead from regulators, expect to see more ads on Yahoo and increased costs like SearchIgnite also predicts.
An economic slump that hurts both Google and Yahoo can hint at a possible decrease in CPCs, but it seems less likely that that will be the case. It’s worth to again note that Google still grew at a rate above 30% and as they continue to decrease the number of ads displayed through their “adjustments” and “updates”, we will most likely still continue to see a rise in overall CPCs. On Yahoo’s side, falling short on earnings will create some extra pressure on Yang to show positive results. Yahoo continue to keep looking at the short term by using additional advertisements from Google and increasing minimum bids (pretty arbitrarily) on a weekly basis which will give them an initial boost in revenue but isn’t fixing their core problems.
Overall, both the Google and Yahoo reports are showing that the economic state we’re currently in does have an affect on search (who would’ve thought increased fuel costs, think shipping rates, and decreased expendible income would have an affect on the online world). Advertisers will feel more pressure to control ROI while hitting sales numbers, but in the end, the industry is still relatively new and will continue to see significant growth.
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