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The Wall Street Journal (finally!) reports today that "Yahoo Inc. plans to introduce a system to broker online advertisements for small and midsize Web publishers, according to people familiar with the matter."


"According to people familiar with the matter"? There's only one source quoted:

A Yahoo spokeswoman said it is "currently conducting some initial tests for new advertiser- and publisher-focused products."

That's hardly confirmation that Yahoo! is specifically rolling out a product to compete with Google's AdSense. But the WSJ is right, and is perhaps relying on (but not publishing) evidence cited last week in The Internet Stock Blog and other sites. (CNET is mentioned in the article.)

The WSJ article also touches on why a Yahoo! product would be well-received by small web publishers:

He [UBS analyst Benjamin Schachter] said some small Web publishers' frustration with Google, particularly related to a lack of detail from Google about commissions, will lead many of them to shift to Yahoo once its offering is available.

Quick comments:

  • True, small web publishers want greater transparency from Google, particularly about the proportion of revenue it pays to publishers versus the proportion it keeps for itself. But the main reason any web publisher should welcome Yahoo's entry to the market is simply that competition will drive down prices, ie. the percentage of revenue kept by the ad broker.
  • The WSJ article is relatively low key, and perhaps understates the threat to Google. It doesn't, for example, attempt to identify the share of Google's revenue that comes from AdSense for small web publishers.
  • It's possible that the full impact of rising competition to AdSense is still not fully "priced in" to the stock.
  • Full WSJ article here (subscription required), and Internet Stock Blog discussion of the potential impact on Google here.

GOOG chart below.
Goog_4

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Source: WSJ on YHOO competitor to GOOG AdSense