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When Yahoo!, the provider of world's second largest search engine, lost out to Google in the competition to be the exclusive provider of search technology and text-based ad services to News Corp's MySpace.com, the disappointment was another indication of Yahoo!'s recent problems, which have included a slump in second quarter net income, the delayed release of ad search enhancements, and a 22 percent drop in its share price the day after recent announcements. However, Yahoo! is still getting revenue from more advertisers moving online, although not as much as Google. Analysts say Google could afford the $900 million cost of the MySpace deal because Google had an efficient ad platform that allows Google to convert traffic into more ad revenues, which is a gap that needs to be narrowed. Advertisers liked Yahoo!'s new search platform, which is more Google-like, but Yahoo! still has to develop sound content strategies into the future, since Yahoo!'s efforts to generate its own content have not been as successful as Yahoo!'s popular third party news, financial information, and entertainment offerings. Yahoo!, which is experimenting with user-generated content with the social networking site 360-Degrees and a user-submitted video page, has to date been bested by MySpace.com and YouTube in those respective segments.
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Information Sources, Inc.
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