Another Asian Partner Abandons Yahoo
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NHN, which dominates the search market in South Korea and has been relying on Yahoo to power search ads on its Naver search engine for six years, says it won’t be renewing the deal—marking the second time in two months that a major Asian partner has cut ties with Yahoo (NSDQ: YHOO). Barclays Capital analyst Douglas Anmuth says NHN is Yahoo’s biggest search affiliate and estimates the defection could cost Yahoo as much as $600 million in annual gross revenue, although the impact on Yahoo’s net revenue—which excludes traffic acquisition costs—will be a much smaller $30 million. (Update: In an SEC filing this afternoon, Yahoo said the NHN deal represented less than 1 percent of its gross profit during the first half of the year).
NHN is the second major Asian internet company to break up with Yahoo, which is in the process of outsourcing its own search technology to Microsoft’s Bing. In July, Yahoo Japan said it would use Google (NSDQ: GOOG) instead of Yahoo to power search on its site. In passing over the company, Yahoo Japan CEO Masahiro Inoue said Yahoo’s search technology was not “sufficiently strong enough for (the company’s) needs.”
SEE ALSO: Updated: Yahoo Japan Chooses Google For Search
NHN is taking its search ad technology in-house, but the company’s assessment of Yahoo isn’t much better than Yahoo Japan’s. Bloomberg News quotes NHN CEO Kim Sang Hun as saying that the company “desperately need an advertising platform that’s more flexible and effective.”
Yahoo’s official statement: “Yahoo! has one of the most robust and innovative search advertising platforms in the world and we will continue to partner with leading companies in Korea in search and display offerings as well as premium content, services and digital products. Our support for Naver through the transition period and as a strategic partner in Korea will not waver as a result of this decision.
For Naver search advertisers it will be “business as usual” as we work through the end of the contract period and for the advertisers who work with us every day, they will continue to benefit from Yahoo!’s technology through other major search partners that are of the highest quality in terms of traffic and share our customer-centric approach such as Daum, Nate and Paran.”
Posted In: Advertising, Search, Companies, Google, Yahoo, Countries, Asia, Korea, Japan, nhn
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