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TV Is the Real Enemy, Yahoo CEO Tells Rivals

At an online advertising conference, one focus is on getting large firms to spend more on the Web.

March 27, 2004|From Reuters

Internet portals must both compete and cooperate if they are to take advertising revenues away from more established media, including television, Yahoo Inc. Chief Executive Terry Semel said Friday.

Both Yahoo, based in Sunnyvale, Calif., and Microsoft Corp.'s Internet unit, MSN, which uses Yahoo's Web search and search-based advertising services, are hoping to gain a bigger share of large companies' advertising budgets.

Major companies now devote only a tiny fraction of their budgets to the Web -- with estimates ranging from 1% to 3%. But the Web portals see an opportunity to raise that share sharply, partly at the expense of American television networks, which face a fragmenting audience.

"We have a common goal. That goal is to take a greater and greater share of the market," Semel told attendees at an online advertising conference hosted at Microsoft's headquarters in Redmond, Wash.

"Not only do I welcome the idea of doing things together, I think it is absolutely critical," Semel said.

"There is no such thing as a major marketplace for advertisers ... if there is only one network to talk about."

Internet advertising, which suffered a major blow during the dot-com collapse, has rebounded with the help of Web search advertising.

According to Internet research company EMarketer, U.S. online ad spending is expected to grow to $8.6 billion in 2005 from $6.9 billion in 2003.

Semel, a former Hollywood studio head, compared today's online advertising industry to the early days of network or cable television.

The future of Web advertising depends more on the establishment of better practices and standards, and less on technology, as it has in recent years with the growth of lucrative Web search ad services popularized by Google Inc. as well as Overture Services, a division of Yahoo.

"Unlike the technology world, where if you own the secret sauce you will dominate with that secret sauce, this requires strong competitors who have, if not equal, similar personalities and similar opportunities," Semel said.

Yahoo last year spent more than $1 billion to buy Web search players Inktomi and Overture, and Microsoft has promised to roll out its own Web search technology this year.

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