Yahoo to Delay Ad Platform Upgrade

  |  July 18, 2006   |  Comments

The company announced the delay as it reported second quarter earnings of $164 million.

Yahoo will delay its long-awaited new interface for advertisers until the fourth quarter, after previously saying it would be ready in Q3. The news came as the company announced its second-quarter earnings.

Net income for the quarter dropped precipitously from the same period last year, because of one-time transactions and a change in the way stock options are accounted for. The company reported a profit of $164 million, or $0.11 per share, as compared to $755 million, or $0.51 per share for the 2005 period. The numbers were in line with what analysts were expecting.

Revenues were up, however. Yahoo reported $1.6 billion in revenues for the second quarter, a 26 percent increase compared to the $1.3 billion it brought in during the same period of 2005.

Yahoo blamed the delay in the launch of its ad platform on previously unforeseen complications in the quality control and testing process.

"We wanted to make sure that we got it right," said COO Dan Rosenzweig, noting that the company plans to perform "over 20,000 different tests." He added, "We'd rather take the extra time to make sure that we do it right rather than rush it for a quarter."

The company has been touting the platform and its new features for months. Changes include keyword grouping enhancements, IP-based mapping features to support geo-targeting, better scheduling capabilities, the expression of business goals such as cost-per-acquisition, and indirect conversion tracking. Yahoo will also move to a Google-like quality-based ranking model as part of the switch.

Yahoo continued to express optimism about its market position in both graphic and search advertising. Though the company no longer breaks out revenue by these categories, it said marketing services as a whole brought in $1.4 billion for the second quarter, up 27 percent over the $1.1 billion in revenues it reported during the same period last year.

The company also used its earnings conference call to speak out on the issue of click fraud. Yahoo execs said its system had been evaluated by a third party, which had found click fraud levels lower than recently-reported public numbers. (Outsell recently pegged the level of fraudulent clicks at 14.6 percent.) The company appears to be trying to capitalize on negative press that competitor Google has been getting around the issue.

"We are committed to establishing industry-wide standards on click fraud," said CEO Terry Semel.

The company kept its predictions for the full year 2006 the same as it had previously forecast. Yahoo expects $4.6 billion to $4.9 billion in revenues, excluding traffic acquisition costs, for the full year. Revenues for the third quarter, excluding traffic costs, are expected to come in between $1.1 billion and $1.2 billion. Those estimates are largely in line with Wall Street expectations.

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ABOUT THE AUTHOR

Pamela Parker

Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.

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