Eyeballs Aplenty, But Where’s the Revenue?

What’s up with Yahoo? The media company has mad uniques–178 million in June, according to comScore–and the Web’s pole position in news, sports, finance, entertainment news, real estate and comparison shopping sites, yet Yahoo’s market capitalization is little changed from 2003.

Randall Stross, professor of business at San Jose State University, writing in The New York Times says:

What a mismatch: Where else on the Web can you find, on the one hand, so many happy users whose growing numbers testify to their satisfaction in Yahoo’s services and, on the other, financial performance that is so lackluster?

Stross’ article motivated me to head over to Yahoo this morning for the first time in eons. Sadly, I have thousands of unopened emails collecting digidust over there. Many of them are from Backcountry.com, a list that’s impossible to unsubscribe from.

But I digress. Aside from Yahoo’s dominance in the above categories, the thing I find most interesting in Stross’ piece is his description of Yahoo’s ad sales model.

Yahoo sells display ads — at a premium price — to advertisers interested in claiming a place on its choicest pages. This is “Class 1 display.” Those purchases do not come via online ad exchanges. They require an old-fashioned sales technique that long predates the digital age — what Carol Bartz, the Yahoo chief executive, calls “face-to-face relationship selling.”

When Yahoo does not manage to sell the available space on its premium pages at a guaranteed high price, it channels the space as Class 2 display into the ad exchanges, where it is sold at much lower rates. In the second quarter, a significant portion of its Class 1 display space in the United States market failed to sell.

Our structure here is similar. We work in advertising; thus, we’ve always felt that it’s our duty to help handle the selling, creation and placement of ads on this site (and that it requires “face-to-face relationship selling”). But like Yahoo, we find it difficult to consistently sell our “Class 1 display,” so we fill the slots with Google Adsense units, and we’re about to embark on a new relationship with Blogads, as well.

Bottom line, I feel Yahoo’s pain. We have the kind of highly focused, monied readership that many companies and individuals would love to reach, and we’re happy to help AdPulp clients find creative ways to reach our audience–by making better banners, offering Sponsored Posts, creating Advertorials and by running your ad in our RSS feed, etc. But none of that logic makes the phone ring.



About David Burn

I wrote my first ad for a political candidate when I was 17 years old. She won her race and I felt the seductive power of advertising for the first time. Today—after working for seven agencies in five states—I am head of brand strategy and creative at Bonehook in Portland, Oregon.