Yahoo (NASDAQ:YHOO) is having a tough time showing a breakthrough profit pattern. It can be profitable, but for the most part, Yahoo’s earnings figures are nothing to write home about. If you compare Yahoo to Google (NASDAQ:GOOG) or other big online brands, it is an also-ran. It is in the same space, but it is kind of like a second or even a third-tier choice.
The primary weakness of Yahoo’s bottom line is that it caters to consumers. It is a business-to-consumer play. In good economic times, there is perfectly nothing wrong with this. The demand among advertisers is normally high during good economic times. The problem is that when the economy heads south, a lot of pressure is put on companies to cut back on advertising expenses. Companies like Facebook take a massive hit during those economic downturns.
Considering the fact that Yahoo is in transition, I would suggest that it should look into monetizing its traffic channels more aggressively. One key area where it can squeeze a lot of profit from is in its chat rooms.
It is widely known among online marketers that marketers use software called bots to simulate females chatting on such chat rooms. These marketers’ business model is pretty simple and straightforward: a guy sees a female profile, clicks on her link and sees a nice looking picture, and at the bottom is some sort of means to get more information about that person. When the guy clicks on that information, he is sent to a website that is not Yahoo. Nine times out of ten, this is an adult dating website. This is lost revenue.
This is just one sample of the many traffic holes Yahoo has. If Yahoo can only spend some time, effort, and energy plugging these traffic holes and monetizing them with Yahoo properties, Yahoo’s bottom line would be healthier. Yahoo is in a great position. It is a solid online brand and it gets a lot of traffic. I just wish that it would be more vigilant in safeguarding its traffic and packing more value into the experience of people who visit Yahoo.
