Wednesday, September 20, 2006

Yahoo's 'Slump' Sorta Significant

Panicky investors dumped shares of Yahoo faster than you can say "bubble burst" after the company tempered its forecast for profits for the next quarter. Yahoo says advertising from automotive and financial clients isn't growing as fast as before.

The sky is falling, the sky is falling!

Not really. Unless you've been under a rock for two years, you have heard that the U.S. auto industry has been tanking, so it's no surprise that they would cut back on their ad spend. While it's only a mid-term election, the prospect of changing the majority party in Congress is making the bean-counters nervous, which is contributing to the slowdown in financial advertising.

So while Yahoo's news isn't as dramatic as the reactionaries think, it also reminds me that online advertising can't grow infinitely. Soon everyone who is capable of holding a keyboard (and has an Internet connection) will have either a blog, MySpace page or will have uploaded a video to YouTube, so the creation of new pages and number of new users will slow down. Also, our infatuation with these services and Web 2.0 companies will slow too, as people at their desks will be spend more time, well, working.

Internet advertising will keep growing at the expense of print and TV, but the rate of growth is destined to slow. Hopefully advertisers will offset lower demand with interactive campaigns that can provide better returns.

Posted By Jason Dowdell at 10:16 AM
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