Yahoo! declares third-quarter earnings shortfall…

In today’s news, Yahoo! announced that it would fall short of its third-quarter earnings due to declining advertisers on its network. The biggest loss coming from the decline in marketing by automotive and financial services. It would appear that the reason for the automotive marketing shortfall is due to its desire to cut costs (see “Ford Cuts 10,000 More Salaried Jobs“, “Ford to offer 3 buyout options to salaried staff“) to help try and stave off the competition from gaining more market share. The question is that since these companies are trying to save money and focus their budget more efficiently, are they going to reduce their marketing budgets? If so, where? Print? Television? Radio? or Online? Based on the news from Yahoo!, it appears that they are trimming their online marketing budgets.

One surprising thing that still amazes me is that online advertising is cheaper than going through print, television, and radio, but it still seems to be the first marketing media to be cut. It also has much better tracking and reporting than any other media. What other media can tell you how many people have seen your ad, clicked on your ad, and even resulted in a search? The rest can only estimate what the audience is.

Unfortunately, that’s not the end of Yahoo!’s woes as they are apparently constantly trying to fend off other competitors such as Google. Moreover, since Yahoo!’s trying to branch out into other Internet social areas, they are being forced to defend themselves from competitors from there as well. Fighting MySpace, YouTube, and others is pulling the company away from enhancing its search engine and online advertising competencies. As a result, Google truly has an advantage over it and can focus on their core competency. Yahoo’s shortfall this quarter is a tentative appearance of being disected by smaller companies intent on making a name for itself.

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