More NewsPublishers React to Yahoo! Revenue Cuts

Publishers React to Yahoo! Revenue Cuts

Other top Web publishers say they know what Yahoo! is just now understanding: that online advertising alone won't pay the bills.

In the wake of Yahoo’s grim announcement last week, other top Web publishers are saying they’ve learned what Yahoo is just now coming to understand — that online advertising alone won’t pay the bills.

On Wednesday, the online giant announced that it likely would post $170 million to $180 million in quarterly revenues, the vast majority of which come from selling ads. That reduced total is close to half of the $320 million it previously anticipated at the beginning of the year. And with as-yet-undelivered ad agreements accounting for all but $63 million of the new revenue estimates, Yahoo’s future as an online ad medium looks uncertain, at least in the near term.

And if one listens to other Web publishers, a large part of Yahoo’s troubles stem from its historic focus on remaining independent.

While the other portals either began as an offshoot of another business — like MSN — or were acquired by other firms — like Terra Lycos, Excite@Home, and About, Inc. — Yahoo doesn’t seem keen on following suit, having said often and loudly that it plans to remain independent. Earlier this month, the company braced itself against possible hostile takeovers by adopting a so-called “shareholder rights plan.” And at an appearance at MSNBC’s “Silicon Summit II” Sunday night, Yahoo co-founder Jerry Yang reiterated the site’s intention to remain independent.

Instead, to combat the difficult ad sales market, Yahoo said it would be increasing its focus on its other revenue streams — subscription-based premium services and corporate portal development.

Interestingly, those diversified revenue streams now approximate the ways competitors are propping up their online media. Terra Lycos sees about 76 percent of its revenue from media, with the balance coming from its ISP business and its subscription-based sites, and

Spokespeople from Terra Lycos declined to talk about their projected revenue for the quarter, although they did say that the company has “been pursuing a very diverse revenue streams for quite a while.”

Online content site About, Inc. recently completed a merger with offline trade and special-interest magazine publisher Primedia, and says it’s well-positioned to ride out the downturn on ad revenue alone — thanks to help from its new corporate parent.

“We’re seeing an uptick in non-dot-com advertisers using the About platform to reach their targeted audiences,” said About president John Caplan. “The About-Primedia partnership sets us up to reach 60 thousand Primedia-endemic advertisers where the Primedia publications and the sister About Web sites are the two most targeted, most popular sources for that advertiser to get leads.”

Caplan also added that income from About’s pay-for-performance search engine, Sprinks, has been “flourishing,” though he declined to comment on specifics.

“What the publishers, and us, are working on is innovative ad formats … new research, and new abilities for advertisers to leverage Primedia assets and well as About assets.”

Caplan said that in addition to launching new ad sizes — including “tower” banners, About would continue to consider new ad spaces and packages. He declined to give specifics, or to comment on whether About would be accepting the Internet Advertising Bureau’s recently announced standards for larger online ads, but rather said that About is in “constant pursuit of new ways of advertisers to reach their audiences.”

Excite@Home, whose primary business focus is consumer and business broadband services, said its portal is similarly insulated, thanks to its parent’s ISP-related businesses.

“Excite@Home has multiple revenue streams, not just media and advertising, and this diversity helps protect us form the softness in online ad market,” said spokeswoman Londonne Corder.

The Redwood City, Calif.-based company says its online ad products reflect a “broadband advertising expertise,” and earlier this month rolled out several new packages for advertisers that presumably reflect this expertise.

In addition to reiterating its support for Flash, Enliven and Unicast Superstitials, Excite@Home said it is debuting its “Giftification” ad package, which combines multiple targeted rich media ad units and integrated content. The package is targeted at e-tailers, ideally to position their products or offers in front of “ready-to-buy shoppers” at multiple points across Excite’s properties.

Products associated with Excite’s new “Home of the Future” Web site will include product placements — in both the real and virtual settings, broadband advertising and consumer research. As part of the package, advertisers’ next-generation products would appear in a New York City loft event, designed to showcase the power of the networked home, and on the “Home of the Future” Web site.

Excite@home also introduced ad packages in conjunction with its screen saver site, and e-card site. The WebShots program sells advertiser graphics as screensavers, which Excite envisions consumers downloading and sending to friends.’s program asks users if they want to include a promotional offers with their online greeting card.

“Our new ad formats are designed to be more appealing,” Corder said. “We believe this strategy and our new services will help us carry the media business through downturn. So not only do we have multiple revenue streams, but we also have a plan for how we’re dealing with the downturn.”

Jed Savage, national sales manager for MSN, said his site is buoyed not only by its relationship to Microsoft, but by what he called MSN’s “proactive strategic planning.”

“The market is tough for the folks that traditionally have built their businesses with the advertisers that came up through the ranks of the dot-coms,” Savage said. “There’s obviously been fallout there. But if you adjusted early on, it hasn’t been a big surprise.”

Savage said that unlike Yahoo — which declined to discuss its future revenue expectations — MSN expects to see 100 percent growth, year-over-year. He also points to a strategy of international expansion that made MSN the biggest site in many international markets — beating even Yahoo.

“We’re seeing great growth in a tough market. There are great brands entering our world,” he said. “We made some strategic decisions, placed some bets a while ago…. We make more strategic decisions — establishing ourselves as a global leader, continuing to build out our market. Continuing to penetrate in markets around the world in 33 markets, and 17 languages, strategically puts us in better position to talk to the world’s largest global advertisers.”

“We have always been vulnerable to the fallout, but nowhere near competitors in our space,” Savage added. “I wasn’t surprised that [Yahoo executives] were making an announcement. We’ll obviously sit back and be interested to see what happens with them. There are tough economic conditions for everyone out there. But they’re a big brand … We’ll see.”

Of course, it doesn’t hurt to have the software industry’s 900-lb. gorilla waiting in the wings. Savage readily admits this fact, and concedes it’s even a major selling point for advertisers — a point that Yahoo doesn’t have.

“We can bring to marketers an amazingly strong story associated with the most recognizable brand in the world, that being Microsoft,” Savage said. “When times are tough, marketers are feeling very confortable spending money with us.” They’re attracted to … our legacy and focus. They know we’re going to be here a while, and we’ve already established our leadership.”

“To that point, it’s not very surprising that this kind of news is coming out from the competitive set,” he said. “I don’t want to come across as arrogant or cocky — the market is definitely a tough market. But we think [MSN is] in a perfect position to be a great partner. We are going to continue to roll out the best products available for marketers to get their hands on.”

Caplan and others were optimistic on the market’s coming into shape before long.

“The outlook is strong, and the reason it is strong is advertisers follow eyeballs, and the Web continues to aggregate a critical mass of eyeballs,” Caplan said. “There’s a disparity between spending and eyeballs, and in time those things will come more and more in line with each other.”

Yahoo’s announcement “does not signal end of online media,” Excite’s Corder said, adding that her portal is also “working with traditional advertisers to work with online media plans.”

Savage agreed, though he added that one way the industry was not necessarily going to recover was through adopting new ad standards.

“Messaging is not going to work with the wrong audience, no matter the ad unit size,” he said. “Online advertising is a great thing for consumers, but that’s not what [industry advocates] talk about. They help consumers when they deliver the right message, in the proper environment, at right time.”

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