Why I Like Yahoo

The ad and tech world has been abuzz with the announcement from Yahoo Inc. (NASDAQ: YHOO) that an ad slump in the finance and automotive sectors will hurt their Q3 numbers.

I don’t really fancy myself a stock expert, so don’t take this as stock advice, but I think there are some reasons to like Yahoo in the long term, which makes this recent dip a potentially buying opportunity.

So why do I like Yahoo?

1. Their revenue is diversified.
The media and analysts are pointing that since Google’s revenue is entirely based on search, they might not be affected as much by this “ad slump”. While that may be true, on the flip side if search advertising took a hit, 99% of Google’s revenue is at risk. Yahoo has diversified it’s revenue streams to come from search advertising, premium display advertising, remnant display advertising, and paid services/subscriptions.

2. Yahoo is a technology and media company.
Perhaps one of the most amazing things about Yahoo is that they have succeeded in both technology like providing search and mail, but they also create their own content and own media properties. It’s difficult to operate in spaces that can be so different from a goal and company culture point of view.

3. Nobody hates Yahoo.
People hate Microsoft. They’re starting to worry about Google and feel it’s grown too powerful and knows too much. But Yahoo? They’re everybody’s buddy. Everyone wants to partner with Yahoo, companies love Yahoo, and consumers love Yahoo.

4. They haven’t tapped their full search advertising potential.
Ask around in the PPC marketing world and you’ll hear most people say that the Yahoo Search Marketing (formerly Overture) is hard to work with and they don’t like it very much. I can personally say that I spend less with Yahoo Search Marketing than Google Adwords simply due to usability. Using the current Yahoo Search platform is not easy or fun, and that’s costing them dollars. Their long-awaited “Panama” release is supposed to revamp the Yahoo Search Marketing platform for the better. If they execute, it will mean more revenue.

5. Yahoo Mail shows 4 out of every 10 display ads.
A recent report said that Yahoo Mail is showing 4 out of 10 display ads. That’s huge. That’s a lot of ad inventory, and I think Yahoo is going to continue to work on making the most ammount of money possibly out of those ads. For all the buzz Myspace gets, Yahoo Mail is still showing more ads.

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