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How The Mighty Have Fallen: Yahoo! Turns To Google for Advertising Pact

How The Mighty Have Fallen: Yahoo! Turns To Google for Advertising Pact

by P. H. MadoreOctober 22, 2015

Many of the early pioneers of the web are now shells of their former selves. Lycos, Excite, and others no longer have any real relevance.

This is not to mention the thousands of other sites that were relevant to users of the early web. Some have survived, such as some of the first major eCommerce efforts, like eBay and Amazon. But Yahoo! has been in a steady state of decline for years now, and some might say it’s reached a new low by signing an advertising deal with Google, a company which was founded six years (forever in technology years) after Yahoo! and began as a project by college students.

Yahoo! Search used to compete directly with Google, but now its searches are handled by Microsoft’s Bing. Yahoo! Groups and Mail used to be massive communities, but now they’re dwarfed in comparison to usage of companies like Google and Yandex. Yahoo!’s primary source of income for years was advertising revenue, but now ad blockers and heated competition have made it more difficult for the company to thrive. It’s not surprising, being that that the company has never been alone in the market. Even now, one of its most successful offerings, Tumblr, was an acquisition a few years for a princely sum of more than $1 billion, and has no great revenue model.

Is it really surprising, though, that a company which has never meaningfully led the way is struggling to stay relevant in an in era when the Internet is dominated by companies forging new ground? The company began as a directory and believed that model was sufficient for a long time, according to historical accounts, until the coming of the web crawler. The idea of the web crawler didn’t originate at Yahoo!, and so they had to play catch-up there. They’ve had to play catch-up on numerous fronts, including eCommerce. Yahoo! itself appears to be in trouble in terms of gaining real traction, however, it seems they have so much money leftover from earlier times that they’re not going anywhere anytime soon.

The new deal with Google, the company hopes, will revive its core advertising business. Against all reason, they’ve managed to pull in over a billion dollars over the last quarter. CEO Marissa Mayer told Reuters in a recent conference call, “We are […] experiencing continued revenue headwinds in our core (advertising) business, especially in the legacy portions.” For all intents and purposes, Yahoo! Is becoming more and more like most websites. No longer a giant among dwarves, the company competes for standard traffic and relies on broken ad blocking to earn anything.

The company still has time to find an actual, profit-building business model. But that would require a streak of originality that doesn’t appear to exist, and perhaps risk-taking is not in the cards for a company just looking to survive.

Image from Shutterstock.

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