Yahoo (NSDQ: YHOO) CEO Carol Bartz started the Q4 earnings call with some humor: “Perhaps I should have read all those risks,” she said, after an exec read the standard investment boilerplate. It was up to CFO Blake Jorgensen to explain the role of advertising in the company’s disappointing report; he tied poor ad performance directly to changing spending habits due to wider economic pressures: “Large advertisers are spending less on brand and more on performance-based marketing,” which is Yahoo’s relative weakness versus companies like Google (NSDQ: GOOG). Bartz repeated Jorgensen’s statement about how the company can take advantage of the downturn and said that Yahoo is actually experiencing increased ad spending from a handful of unspecified advertisers.
Additionally, both Jorgensen and Bartz discussed the strength and importance of Yahoo’s search business, although it is considered a weaker area for the company compared to its display business. (More details on Yahoo’s search business by Tameka Kee here.)
– Display ad revs declined 2 percent, continuing the deceleration the company has seen over the past year. International would have shown non-guaranteed inventory has grown. “We still believe we will be the beneficiary as marketers consolidate their budgets with strong brand names… While we believe online advertising will be stronger than traditional advertising, marketers are giving us less visability as to their spending plans.” The affiliate business was also down 2 percent.
More ad-related discussion from the Q&A after the jump.
– APT attention: This past fall, Yahoo introduced its long-awaited display ad delivery and management tool APT to the Yahoo Newspaper Consortium with great hopes. The complete rollout is scheduled to be done in Q1 but don’t expect any major boost to the company’s display revs. Jorgensen: “Investments are continuing in APT, but we’re not adding any new investment. but you’re seeing more caution on display advertising. Barclay’s Doug Anmuth wondered whether premium advertising is seeing pressure from the economy. Jorgenson: “We’re seeing growth in class-two advertising and we expect CPMs to hold steady over time.” Later, Jorgensen said that class two is still very small, despite that growth. As for the state of class one, which is larger but experiencing slower growth, and class-two advertising, Jorgensen said he hasn’t seen much change in terms of the former’s lead over the latter.
– Beer and sales: Striking a populist stance, Bartz plans to get to know the salespeople a little better in the next few weeks and discuss the path she wants to take and what their views are. “I’ll sit down and have a beer with them, which is the best way to get to know the sales leaders.”