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Monday, September 18, 2006

Yahoo!, A Day Late And A Dollar Short


Word comes from AOL Money that Yahoo! will spend millions of dollars on an advertising campaign to bring visitors to is redesigned site. The move is the biggest marketing push since two years ago, and it counters expensive campaigns from MSN and AOL.

Now that Yahoo! has redesigned it homepage and e-mail, the company believes that the advertising campaign my help its flagging image. "Yahoo is probably feeling some erosion of its brand," said Brad Scott, director of digital branding for San Francisco consulting firm Landor Associates. "They probably want to build some awareness again."

The problem is that Yahoo! doesn't have much to talk about. Google is viewed as having superiod search techniques and better text ad targeting. In most other areas like maps, photos, classifieds, and business directories, Yahoo! has no perceived advantage over its rivals. As a matter of fact, Yahoo! is late to the market in arenas like video sharing and movie downloads where rivals like Google and AOL appear to be taking early leads.

Yahoo!'s stock has dropped $43.66 in January to $29.32 now. Slowing revenue growth, particularly compared to Google, has hurt the company's image as a growth stock.

Yahoo! needs more than an ad campaign. It needs to pull even with Google on search technology and watch out that Microsoft does not get to that point first.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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