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?
- Google doesn't disclose its revenue share with small publishers.
- There's evidence that Google is increasing its share over time.
- 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.