When success isn’t really

Beginning a week from today, the big three internet giants — Google, Yahoo and Microsoft — will each report quarterly earnings. Anders Bylund at The Motley Fool suggests it’ll be “another blowout quarter from Google, a Microsoft that’s all Vista and no Web, and a Yahoo! struggling to make ends meet.” It’s important that we all remember this as we make our assessments of what’s “working” and what isn’t in terms of local media web strategies.

In the past two years, Google has grown revenues from $3.2 billion in 2004 to $10.6 billion in 2006. Operating profit more than quintupled in that time frame, from $640 million to $3.6 billion.

Yahoo! snags a solid second place, kicking sales up from $3.6 billion in 2004 to $6.4 billion, and increasing its operating income 37% to $941 million.

You see, Google and Google’s model is what’s generating the heat in terms of real online revenue, and that’s not the way most people in the traditional media world see things. The mantra of traditional media is if we can just get enough page views, we can make some real money, but the dirty secret is that, given current rates that advertisers are willing to pay, it would take billions of monthly page views to generate serious money, and that’s just not going to happen.

Yahoo ranks ahead of Google in terms of page views, yet Google does almost twice the revenue. Think about that and try to compute the numbers necessary for Yahoo’s portal model to “catch” Google. And let’s not forget that Nielsen NetRatings is dropping the page view as an ad metric anyway.

The Baltimore Sun carried an interesting story yesterday by their television critic, David Zurawik, titled “TV news attempts an online comeback.” The piece is an optimistic look at the money that is rolling in for some companies with successful brand extension strategies. It suggests that success in this year’s upfront came, because “Madison Avenue has agreed to pay the networks for some new media audiences when buying advertising time on fall schedules. As a result, the major TV networks for the first time in four years will show an increase in upfront sales revenue — instead of a projected take of $8.5 billion, the five networks have already passed $9 billion.”

The story also cites significant gains in traffic on the CNN site along with the amount of time users are spending there, known as “stickiness” during the bubble days (and Nielsen’s new/old metric). Zurawik uses year-over-year numbers but doesn’t take into consideration CNN’s major decision to switch from a paid video model to one that’s advertiser supported during that period. Obviously, their metrics would go up after that.

I say this not to be picky, but for all the good news stated in the story — and let’s face it, there really is some good news for these companies online — nobody seems willing to talk about the reality of comparing this revenue to that which is being lost from traditional sources. Because if you can combine web and traditional, why are layoffs the norm and takeovers by private companies the flavor of the day?

The truth is that brand extension, reach/frequency strategies and tactics are only going to go so far. I’m happy to occasionally point to such success stories, but I won’t really rejoice until I see evidence that mainstream media companies are moving INTO the Media 2.0 disruption in addition to just using its tools for extending their brands.

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  1. […] YouTube Link to Article yahoo When success isn’t really » Posted at Terry Heaton’s PoMo Blog on Monday, July 09, 2007 When success isn’t really July 9th, 2007 Beginning a week from today, the big three internet giants — Google, Yahoo and Microsoft — will each report quarterly earnings. Anders Bylund at The Motley Fool … , and a Yahoo! struggling to make ends meet.” It’s important that we all remember this as we make View Entire Article » […]

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