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Yahoo Warns of Slowing Internet Advertising Sales 83

narramissic writes "Yahoo chairman and CEO Terry Semel warned that a slowing U.S. economy is starting to impact ad sales, particularly in 'autos and financial services.' But Yahoo was careful to note that it cannot tell whether the current slowdown is a sign of broader trouble or is limited to ads from the auto and financial sectors."
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Yahoo Warns of Slowing Internet Advertising Sales

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  • Doesn't a slowdown in sales (implied by advertising) of financial services pretty much directly correlate with a slump in the economy...?

    (IANAEconomist)

    • by BWJones ( 18351 ) *
      Well, while I also am not an economist, there are some commonly understood signs of economic slowing. One of the principal leaders or forecasting signs are ad revenues. Others are job postings, initial unemployment indicators, shipping volume through US Postal, and private carriers like Fed Ex, UPS and DHL.

      What are the stats? I am not sure, but from my limited reading, it appears that a variety of factors stemming from increased fuel prices and continued international unrest in the middle East appear to
    • to go with boom of web2.0 could this actually be a beta of bust2.0?
    • Not to mention the absolute horde of economic data which shows that a major US slowdown is not only inevitable but has actually already started. It seems though the government are doing absolutly everything they can to cover this up at least till after november.

      What makes me mad though is that US companies need all the info they can get to enable them to ride out this slowdown with minimal losses, yet the government is currently hiding the truth purely for political reasons. Come December when they actuall
      • by TopShelf ( 92521 )
        But come on, Chicken Little, can't you sound the bugle and warn those small companies before it's too late? No fair hoarding your secret information from the rest of us...
      • by nido ( 102070 )
        You'd be interested in the Shadow Stats [slashdot.org] guy (link in that post).

        Just assembled a comment [slashdot.org] in another thread in this story; you might find something interesting there too.

        This economic correction will be hard to ride out - think "greater depression". A real 'new economy' is coming our way, but the old one's leaving kicking and screaming...
    • I don't know about the other stuff, but if you have ever tried to by a car online you could probably understand why auto-ads may be declining regardless of the economy. I first tried this about 7 years ago, and found it to be a very useful experience. I got the car I wanted, with the features I wanted for a fair price, without ever having to leave my house.

      I recently decided I need a 4 door, and had to go through this process again. It was...much changed. Every vendor within 50 miles called me up to quote m
      • In my experience, the problem is not that the entire internet sales industry has changed: it's just the Honda dealers. In my areas, they have enough demand for everyone, so they won't give you anything that resembles a good price. In some models, they won't even bother stocking or special ordering bare bones vehicles. Other automakers, including the rest of the japanese, will actually come to you with much better offers. Just a year ago, I got a starting offer for a japanese car that was $4000 under invoic
        • I bought a bare bones 2003 Honda Accord LX Coupe from a dealer in Southern California. I negotiated my price through the internet and was able to get it for $1000 under 'invoice'.

          p $8000 under MSRP or $4000 under invoice sounds good, but when you're after a basic no-frills model the reality is that they're not marked up that much and you can only talk the price down so low. I got my Accord for just over $17,000 (not including tax) and even though it has no options, the standard features are sufficient for

      • by RKBA ( 622932 )
        Get a Skype telephone number.
    • The summary states it is a slowdown in sales, while the article states that it is a slowdown in the GROWTH of sales. Sales are still increasing, but not as fast as they once were.
  • Boo Hoo (Score:2, Interesting)

    by DreddUK ( 255582 )
    So everyone sells Yahoo! stock, because the growth is slowing, not because sales are decreasing. So this implies that the growth calculations were agressive, not that there's anything directly wrong with ad sales.

    Advertising sales from both sectors have slowed down during the past three to four weeks, although both remain on a growth track. "They're growing, but they're not growing as quickly as we would have hoped at this moment in time," said Semel.

    Quicker damn you, grow quicker...

    • ..this could also be Yahoo! trying to redirect some of its own loss upon Google. Given that they're making such a generalization based only upon short term quarterly data, yet extrapolating into the future..this may just be corporate posturing.

      -- Consider:
      Yahoo's projection of advertising growth was a bit over enthusiastic --> Yahoo investors show their disappointment with the purse --> Yahoo attempts to save face by characterizing their own messup as an (exaggerated) general market trend --
  • by UbuntuDupe ( 970646 ) on Wednesday September 20, 2006 @11:18AM (#16146195) Journal
    Sorry for being a cynic, but I don't see how a decrease in financial services or car ads are a bad thing.

    1) Cars: auto sales are currently a big cartel. Every state has regulations stopping or significantly shackling internet sales of new cars. All that auto dealerships now offer you is the degrading process of "oh, gee, I dunno, I'm gonna have to talk to my boss about that offer you just made" and "here is a payment plan we can offer you in which I'll only talk about the monthly payments and hide the effective 14% interest rate that amounts to".

    2) The financial services industry basically revolves around convincing people to invest with them to "beat the market". They thrive on artificially increasing the complexity of investing. I've had a financial advisor tell me that my investment plan is going to look "totally different from the guy in the next cubicle". Yeah, same age, same investment horizon ... whatever, dude. In reality, most of them can't "beat the market" and all you get is the honor of paying them usurious fees for their stock-picking "wisdom".

    We really do need less of these ads. Is there something bigger I'm missing?
    • by kfg ( 145172 ) *
      2) The financial services industry basically revolves around convincing people to invest with them to "beat the market".

      Don't forget 14% auto loans. :)

      KFG
    • All that auto dealerships now offer you is the degrading process of "oh, gee, I dunno, I'm gonna have to talk to my boss about that offer you just made" and "here is a payment plan we can offer you in which I'll only talk about the monthly payments and hide the effective 14% interest rate that amounts to".

      It's true that dealers will try to funnel all negotiations in that direction, but if you're firm they will negotiate price and finance interest rate separately (firm means be prepared to walk out). Get pre

      • It's true that dealers will try to funnel all negotiations in that direction, but if you're firm they will negotiate price and finance interest rate separately (firm means be prepared to walk out). Get pre-approved financing from your bank or credit union and walk in prepared to pay cash. They'll still try to sell you their own financing, but if they beat the other rate, it's a bonus for you.

        I understand all that, but I think you missed the central point:

        You shouldn't have to "be firm" or whatever. You sho
        • There was a magical moment when you were right, and you could do that, but the bean counters noted a decline in profits. You would be surprised at how many people walk in and pay MSRP, or near it. For items this expensive, I see only ONE way of solving this problem:

          Everyone who buys a car mails a copy of their receipt to a central site which puts it in a database, with all relevant information. If you want to buy a car, go to the site, pick the model, and start looking through receipts and figure out what y
        • If you don't want the typical slimy dealership experience, there are ways around that. There are auto broker services like Carsdirect, Autonation, and Costco that will sell cars for a pre-negotiated discount price. Carsdirect even gives you their price right on the website, no need to call for a quote. It doesn't get any easier than that. The reason no-hassle one price doesn't work is because buyers looking for a deal will take the no-hassle price into another dealer and they'll beat it.
          • You're still not listening. I'm not talking about, "okay, we'll give ourselves a fat markup -- just to save you from ALL that stress of haggling!" -- the "pre-negotiated discount price" you referred to. Look at what you said: "The reason no-hassle one price doesn't work is because buyers looking for a deal will take the no-hassle price into another dealer and they'll beat it."

            Dude, if a dealer will deign to lower his price because you could confont him with the outside offer, he was charging an unjustifie
    • by nido ( 102070 )
      Newsflash: U.S. economy is in BIG trouble.

      Short history lesson: Federal reserve started to inflate the money supply [aol.com] in early 1995 (blue line in the graph). The 'tech bubble' followed a couple years later. That trend wasn't sustainable, and the dot-coms bombed sometime in 2000/2001. The economy was well on its way to a recession by late-summer/fall 2001. The Federal Reserve responded to "9/11" by cutting interest rates to 1% (over several months), supposedly for the purpose of 'stimulating' the economy
      • I agree with a lot of what you're saying, but could you explain what's stopping you from starting your own worker-owned cooperative *right now*? Remember, removal of this barrier must not *also* significantly help "larger corporations" or else it wasn't much of a barrier. In other words, be careful not to say, "if I were to raise the capital from a large group of friends, they would hit me with $HORRENDOUS_TAX" wihout at least *checking* if large corporations pay the same tax.

        I'm not trying to badger you,
        • by nido ( 102070 )
          could you explain what's stopping you from starting your own worker-owned cooperative *right now*?

          I guess there's nothing stopping the formation of cooperatives, so much as that the system is set up to favor the formation of corporations. This includes corporate privledges (for example: no shareholder liablity for corporate fuckups - government picks up the tab if the corporation leaves a big mess after it dissolves), and a school system designed to create worker-drones (see Gatto link in original post).

          Al
    • Yea, I concur. In fact, I first parsed the /. headline as "Yahoo Warns of Internet Advertising Slowing your Systems."

      Because my CPU usage pegs at 100% whenever I leave a browser window open showing one of those inane ads depicting a lactating sow with 50 teats, and a suckling piglet for each state of the USA.

      I could easily make do without those kinds of Internet Advertising, TYVM.

  • hmm (Score:3, Interesting)

    by joe 155 ( 937621 ) on Wednesday September 20, 2006 @11:18AM (#16146200) Journal
    are sales slowing, or moving away from Yahoo? I know they've had a fairly poor showing as of late, is this just an attempt to try and explain that away within a more general setting and keep the share price up, hoping that people will see them still as a good bet? Still, I suppose that buying new cars might be one of the first things to take a hit if the economy was slowing, but wouldn't this spur advertising?...

    Anyone have google's ad revenue relating specific to these areas?
  • could the adblock utilities have any effect on this? i think we've all known that if everyone used adblockers, we'd have a big problem: free sites would no longer have any income. we havent really worried about it because it didnt seem like enough of us were using them to make a difference.

    could this be the first sign?

    • by wfberg ( 24378 )
      could the adblock utilities have any effect on this? i think we've all known that if everyone used adblockers, we'd have a big problem: free sites would no longer have any income. we havent really worried about it because it didnt seem like enough of us were using them to make a difference.

      could this be the first sign?


      No, this is about selling the ads. Getting people to see them is step 2. If too many people use adblockers, you will need to spend a lot more effort at getting non-adblockers to see them, incr
    • If a substantial percentage of people were blocking ads [to the point where it substantially impacted on the company], it would be fairly easy from a technical perspective to require people to access the ads. But, I think a lot of places avoid doing this on the basis that the people who block the ads are unlikely to respond to them anyways.
      • by Mprx ( 82435 )
        It's easy to require downloading of ads, but not to require viewing them. The only solution I can think of is embedding a captcha in the ad and requiring the reader to solve the captcha before accessing the page.
        • "... embedding a captcha in the ad and requiring the reader to solve the captcha before accessing the page."

          You are a sick and twisted individual.
          Unfortunately, you have a bright future ahead of you in advertising.

          Cheers
          Dave
    • I don't think car vendors and financial services have much interest in the smart-enough-to-use-Adblock demographic.
  • by StandardDeviant ( 122674 ) on Wednesday September 20, 2006 @11:20AM (#16146208) Homepage Journal
    Hmm, ad sales slowing down in sectors that are strongly sensitive to interest rate changes, at a time when interest rates have been ramped up by the Federal Reserve (who are only now starting to talk about slowing this rate hike campaign)? Color me somewhat unsurprised. A sharp dip in a few sectors is less worrisome to me than a shallower dip across the board. If the broader ad market begins to slump and does so for a few quarters in a row, yeah, it might be time to rethink all those old-but-new-again ad revenue dependent business models out there.
    • Interest rates are the key to advertising speding in both sectors.
    • "...at a time when interest rates have been ramped up by the Federal Reserve (who are only now starting to talk about slowing this rate hike campaign)?"

      Contrary to popular belief, the Fed has very little latitude in setting interest rates because interest rates are market driven. The government finances a portion of its debts through borrowing (issuing bonds) and must consequently pay whatever the lowest bidder offers. See: How Treasury Auctions Work [treasurydirect.gov]
  • housing bubble [cnn.com].

    For those of you that don't think this can affect the economy across the board, just remember the tech bubble from a few years ago.

    • All one has to do to see the consequences of a real estate bubble is look at what
      happened to Japan back in the early 90's when the Nikkei took a serious nosedive.
      To be sure, it was only one piece of the bubble, but the land being seriously
      overvalued (as much as 14 times it's current values, which are still dropping...)
      and the sudden cooling of the economy by the government triggered a spiral they're
      still trying to recover from- and the land/property bubble made it much, much
      worse than it probably ought to h
    • IMO, the problem is a credit bubble, of which housing prices (both in the US and abroad) are a symptom. Too much spending, too little saving. I think we're going start experiencing a global recession/depression starting around 2008... It'll be interesting to see how central banks respond to this upcoming challenge. If the past half decade has been any indication, they'll start handing out cheap money right and left...
  • Hmmmm (Score:3, Interesting)

    by jasoneisen ( 1003614 ) on Wednesday September 20, 2006 @11:22AM (#16146230)
    Sounds like someone's sales are slumping, and they want to bring the market down with them.
  • by Penguinisto ( 415985 ) on Wednesday September 20, 2006 @11:23AM (#16146242) Journal
    IANAE (and thank Heavens - my social life is geeked-up enough as it is), but why the doom-and-gloom over what IMHO is basically a short-term shift? (the US economy grew at 5+% the first quarter of this year, and 2.5% 2nd quarter)... (ref: here [google.com] . I mean, seriously - if they were relying on year-to-year results to get a trend, okay... but quarter-to-quarter for a long-term forecast? Maybe I just don't grok economics so well, but it seems weird to me, to say the least.

    Also, US Economy != World Economy, influences be damned. Is the global economy slowing overall, or no?

    After RTFA, I think someone was trying to short some Yahoo stock more than make an accurate forecast...

    /P

    • by TopShelf ( 92521 ) on Wednesday September 20, 2006 @11:58AM (#16146537) Homepage Journal
      Don't take this story for more than it is. Yahoo is adjusting their guidance for the quarter downwards (at the low end of their range, not below it), and they note shortfalls in a couple major advertising sectors. There's nothing long-term about it, and they're tossing up a broader slowdown as a possible reason for their shortfall. That sounds like speculation more than anything else...

      And yes, IAAE (at least that's what my degree is in, I don't work professionaly as one).
    • by Trailer Trash ( 60756 ) on Wednesday September 20, 2006 @12:09PM (#16146627) Homepage
      Whoever posted the article forgot to add that the terrible economic outlook is Bush's fault.
      • A joke I realize, but remember when Bush first came to office -- before 9/11 (so you'll really have to think hard) -- and one of the first things he and his spokespeople did was badmouth the economy. They had 2 obvious motives:

        1. The economy was slowing down in the wake of dot-com (which was really as much biotech) mania and they wanted to be sure to pin this on Clinton

        2. A justification for big top-heavy tax cuts

        Then 9/11 came along and solved all those tricky public perception issues (also pre-empted Chi
  • My fault (Score:5, Funny)

    by misleb ( 129952 ) on Wednesday September 20, 2006 @11:24AM (#16146251)
    Sorry guys, this is all my fault. See, I block all ads. I'm antisocial. Forgive me?
    • Really? I block ads and am anti-social as well. Wouldn't it be great if there was a place on the web where we could all hang out?
  • How can they just blame the economy for a slump of impact ads. There could be several other factors that could cause the same effect. As if the slow U.S. economy is only effecting Auto and financial ads. I believe we would see slow down in many other areas. Maybe they just aren't using effective advertising.
  • With that proportion of the economy involved in getting blown up and destroyed it's not entirely surprising the economy is in trouble.

    http://www.thebudgetgraph.com/ [thebudgetgraph.com]

    Most of it is paid by borrowing rather than taxation, but the increased money supply simply kicks inflation and therefore interest rates into high gear. It'll get worse as the Arabs liquidate their dollar holdings.

     
    • Umm, huh?

      You really might want to read This [cbo.gov] first... 64% of total sounds more than just a bit too big of a number, 'mano. (the site you supplied may explain why... I'm not Bush's greatest fan or anything, but man - propaganda is propaganda, no matter what side you view it from)

      /P

      • It's the discretionary budget. The stuff they can choose to spend your income tax on. Social security, medicare/medicaid are paid other ways. It matches fairly closely with the pdf btw.

         
    • Hi Colin. You don't surprise me. You somehow forgot to include all the entitlement spending (Social Security, Medicare, Medicaid, welfare, etc.). You know, the stuff that would change the "defense" figure to more like 17%. Oh, that's right -- non-discretionary doesn't count. Because Congress is POWERLESS to cut Social Security benefits (except for hiking the retirement age and starting to tax benefits, which they already did).

      (Not to trivialize defense spending of course -- in absolute terms, it's big.
      • "64% of the US Discretionary budget is military spending" was too big to fit in the subject line and it makes a bigger impact, one proportional to 64% of income taxes being spent on the military. Medicaid/medicare and social security aren't paid through income tax.
    • Who on earth would graph federal spending and not show the "non discretionary" portion?

      That's like me telling my wife that we have to cut back on groceries and diapers, because they consume 84% of our discretionary spending. Meanwhile, I'm spending 8 times as much on heroin, crack, hookers, and video games and calling it "non discretionary".

      Social Security and Medicare are going to bankrupt us a lot faster than tomahawk missiles.
      • Who on earth would graph federal spending and not show the "non discretionary" portion?


        Someone who wanted to show how income tax was spent?

         
      • Social Security and Medicare are going to bankrupt us a lot faster than tomahawk missiles.

        Last year military spending last year, at $494 billion, which exceeded combined Medicare and Social Security spending by $16 billion. Military spending also has a far higher growth rate... and will grow at an even more rediculous pace if George Bush desides to pick a fight with Iran.

        At least social security and medicare have thier own dedicated source of funding. To fund all those tomahawk missles, we are borrowing mon
      • No its telling your wife that you have to cut back on guns and expensive cars because you need to pay for your healthcare, save for retirement and take care of your ailing mother. I mean literally, thats exactly what it is. How anyone could consider Medical care and care of the elderly to be "a choice", well thats pretty fucking barbaric.

  • "Hi Y'all! I'm the Honda Fit. I'm totally spacious and affordable. My fav bands are the Chemical Brothers and O.A.R. Here are some pics of my fam, Uncle Civic, Granny Accord. Y'all, I'm 0.0% APR for 20 months!"
  • Two options (Score:3, Insightful)

    by MosesJones ( 55544 ) on Wednesday September 20, 2006 @11:31AM (#16146312) Homepage
    1) There is a downturn in Auto advertising and FS advertising
    2) Yahoo are getting a smaller slice of the advertising pie

    If you were the CEO, which option would you talk about?
  • by dougman ( 908 ) on Wednesday September 20, 2006 @11:57AM (#16146529)
    While there are always "signs" that point to "weaknesses" in the economy, most of what is out there is FUD spread by the mainstream media. The reality is that the current administration picked up the pieces of the .com crash and 9/11 and has done a remarkable job energizing the US economic engine through tax cuts. I encourage you to read the following piece by respected economic advisor Lawrence Kudlow: http://www.realclearpolitics.com/articles/2006/07/ the_bigbang_story_of_us_privat.html [realclearpolitics.com]

    Here's a few points:
      - Did you know that just over the past 11 quarters, dating back to the June 2003 Bush tax cuts, America has increased the size of its entire economy by 20 percent?
      - In less than three years, the U.S. economic pie has expanded by $2.2 trillion, an output add-on that is roughly the same size as the total Chinese economy. (so much for the "China is going to surpass us anytime soon theory - ed.)
      - Since the 2003 tax cuts, tax-revenue collections from the expanding economy have been surging at double-digit rates while the deficit is constantly being revised downward.

    Housing MAY cause some short-term pressures (though I think this will be more isolated than is being reported) but it certainly isn't going to cause the economy to come to a halt. Maybe Yahoo should take a look at Google's numbers which, if I'm not mistaken, are doing just fine on the ad revenue side. Perhaps Yahoo should take a look in the mirror before proclaiming this is a US economic problem. When all the indicators show that online advertising rates industry-wide are down for multiple quarters I'll listen. Until then, this looks like short-term CYA by a CEO to help explain why his SG&A and EBITDA are not meeting the numbers the analysts want to see next quarter.
    • I don't know if this is discussed in the reference, but the housing market (and the increase in housing prices correlated with it) might be a substantial problem. A significant number of people have pulled value from their homes via home-equity loans, and if the loan rates are variable, increased interest rates simultaneously increase their payments and decrease the value of their house (by decreasing the market for their houses). Salary increases have not increased much more (if at all) above inflation, so
    • by mutterc ( 828335 )
      over the past 11 quarters, dating back to the June 2003 Bush tax cuts, America has increased the size of its entire economy by 20 percent

      Huh. That kind of makes me wonder where the money goes. I don't personally know anybody who is better off (especially taking inflation into account) as they were then.

  • by Distan ( 122159 ) on Wednesday September 20, 2006 @12:03PM (#16146579)
    I wonder what is included in the "Financial Services" category. Some posters seem to assume this is just all the online brokers. I bet it is more than that.

    One of the most frequent (and annoying) class of advertisers I see on Yahoo are the seedy mortgage brokers, with all their ads for "teaser rate" interest only adjustable rate mortgages.

    Now that the bottom is falling out of the mortgage industry, the brokers are getting more desperate for new suckers, er I mean "clients". There are less of those to go around and naturally the advertising is going to fall off.

    Maybe Yahoo should just lift their prohibition against advertising porn. I bet they are leaving a lot of dollars on the table by not being willing to have a crotch shot on their home page. At least that industry is more ethical than the people who have been selling negative amortization adjustable rate mortgages on over assessed homes to people who least understand (and can least afford) what they were being set up for.

  • Maybe the people buying the advertising space are just catching on to the fact that people don't read yahoo ads? What average person is really going to see an ad on the corner of their screen and say "Damn, that little text ad is so rocking that I think I need to go buy a car from them right now"?
  • Yep, looks like a definite downturn in the debt industry, IMHO.
  • Comment removed based on user account deletion
  • Online advertisers are increasingly moving from advertising on large portals to viral marketing and advertising on blogs.

    I wouldn't be surprised at all, if that means Yahoo is seeing less ad revenue.
  • ...saturated. Extreme low interest rates by the Fed led to an over abundance of "irrational exuberance" part two to try and bring the economy out of the mini recession caused by the dot bomb years, and any one who wanted a cheap mortgage got one, then proceeded to try their hands at flipping to make fast easy money cash. Now that that is about milked out, and a lot of people are now stuck with over priced real estate and ARMS...well...

    Cars. Again, saturated with all sorts of vehicles people don't want, and
  • Maybe these advertisers have actually realized that Yahoo! actually sucks.

  • Yahoo was careful to note that it cannot tell whether the current slowdown is a sign of broader trouble or is limited to ads from the auto and financial sectors.

    Or limited to Yahoo's sales of auto/financial ads, perhaps because of a lack of response from Yahoo users. Or maybe online advertising is just ineffective, and those two sectors are simply the first to realize it. Or maybe it's just a completely meaningless fluke. Thanks for clearing that up for us, Yahoo.
  • Meanwhile the likes of Google et al produce record numbers.

    The problem isn't the economy, it's Yahoo. I hate it when someone says, "Oh but they're a mature company, their sales are flat." There's no such thing as a mature company, there is only a company that has forgotton how to innovate. Yahoo's advertising system is a disaster. Especially their "ad sense" killer which bombed horribly.

    Yahoo's problem is itself, period.
  • The slowdown in ad sales for financial services is because of the trashing *cough* overhauling of the finance message boards, thus driving everyone with at least two brain cells FAR AWAY.

    The finance boards have turned into a sewer.

    If all you have left is the chucks, the 13 yr olds, and the drunken profane bloggers, just _who_ are you going to sell _FINANCIAL SERVICES_ to?

    EH? TERRY?

    My gawd, someone needs a fr0h slap.

    The next Yahoo advertising push is "What would life be like without Yahoo?"

    Well, I'll tell ya

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