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Multiple reports confirm that Yahoo! (ticker: YHOO) is preparing a competing service to Google's AdSense. AdSense is a fully automated contextual advertising program for publishers that has been remarkably successful in attracting small Web publishers.  Details and implications:

  • Ken Rudman, a product manager at the Overture division of Yahoo!, writes a blog called The Ink-Stained Wretch. Take a look at the skyscraper of ads on the left-hand side of the page. They're not from Google or Kanoodle.
  • Andy Baio noticed that the ads are hosted on an Overture server and are labelled "YPN", which he guesses stands for Yahoo Publisher Network.
  • Webmaster World, a message board for web publishers and commerce companies, adds discussion.
  • Richard Kamen then reports on the story for SiliconValleyWatcher.

Comments and analysis:

Web publishers are clamoring for a competitor to Google. Why?

  1. Google doesn't disclose its revenue share with small publishers.
  2. There's evidence that Google is increasing its share over time.
  3. Yahoo's entry would increase competition, probably resulting in a higher share of ad revenues for publishers.

Impact on Google?

  • Expect YPN to have early teething troubles (there have already been comments about poor contextual matching) and initially slow take-up by publishers.
  • Yahoo's success will depend critically on its ability to automate the sign-up and payment process for small publishers. Google has excelled on both counts, but still doesn't offer direct deposit (electronic transfer) of payments to small publishers.
  • Once Yahoo's service gains traction, Google will face tougher pricing and reduced growth compared to its current monopoly position.

One year GOOG chart below.
Goog_3

Source: YHOO readies competitor to GOOG AdSense