Yahoo’s Choices a Win-Win Situation

Apr 20, 2008  •  Post A Comment

Whether Yahoo falls into the arms of Microsoft or AOL won’t matter much to advertisers, since a match-up with either suitor would bring more reach and scale to broadband video advertising, experts say.
Earlier this year, Microsoft made an unsolicited bid for Yahoo, which the most-visited group of Web sites rebuffed. The software company remains interested, but AOL subsequently entered the fray, kicking off discussions with Yahoo about creating a combined company.
All three players—Yahoo, AOL and Microsoft—have strong relationships with brand marketers who are keen to put their money into online video. Ad dollars for online video should rise to $1.4 billion this year, up from $775 million last year, according to eMarketer. The bulk of that money likely will go to TV network Web sites or to the big portals, because they offer content that advertisers are comfortable sponsoring.
“I am optimistic that any combination of those two or three would provide us with an equal or better level of service, access to content and flexibility to serve our customers a large source of videos to choose from,” said T.S. Kelly, senior VP and director of research and insight at Havas Digital.
Those three sites provide a video environment that is brand-safe, whereas sites with user-generated material are often dicier ad propositions, he added.
Both AOL and Yahoo declined to comment for this story.
Good for Scale
Advertisers also are keen on scale when it comes to broadband ad video, said Will Richmond, president of VideoNuze. “Either deal is good news for broadband video, as they would each increase scale and reach that advertisers are looking for,” he said.
All the Yahoo suitors have invested good money in creating the infrastructure to sell online video ads, said Andy Olmsted, president of Pinnacle Road, a consulting group on business strategy. “If the new combined entity gets ad sales right, it means the creation of a more attractive platform for advertisers, media folks and content producers versus what they had before. But if they didn’t sell, Yahoo and others still would be working on these things.”
But don’t expect either match-up to change the leaderboard when it comes to eyeballs. That battle has already been won by YouTube.
For the month of March, YouTube accounted for 73% of all Web visits in the U.S. that went to an online video Web site, according to online audience measurement firm Hitwise. MySpaceTV came in second with 9% of visits, followed by Google Video with 4%. Yahoo Video was fourth with 2%, followed by Break with nearly 2%.
However, YouTube was the only one of those five sites to increase its market share of visits from the same time period last year, with a 32% rise. Yahoo Video fell 18% in market share of visits to its site.
“The trajectory of video on the Web would remain similar to its current path,” said Bruce Leichtman, president of Leichtman Research Group. “I don’t think that a merger or a sale would mean that the evolution that is already taking place in the realm of video on the Web would be far different from its current course.”

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