The Big Yahoo Announcement

from the is-it-that-big? dept

Lots of coverage on the news that Yahoo's latest quarterly profits more than doubled suggesting that (could it be?) online advertising might actually pay off in some way. As many studies have been saying, bigger advertisers have finally stepped up their online ad budgets and much of that money is heading to Yahoo. There is, however, the interesting question of whether or not their deal to buy Overture will help or hurt them in the long run. When it first happened, many people thought it would help, since they would be getting all the revenue from the searches and not feeding a portion back to Overture. However, as some of us asked at the time, there is the other side of the coin: all the other users of Overture's services now have incentive to leave and sign with someone who isn't competing directly against them (some have already tried to get out of deals with Overture for that very reason). So, the question is how much business will be lost compared to how much money will they get to keep? You also have to wonder if the decision was somewhat defensive - and that it's possible they didn't want Microsoft to end up buying Overture instead.

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