…when Google posted $1.26bn in revenue to Yahoo's $1.17bn. The gap has been growing ever since.
"Yahoo is still trying to play catch-up, and Google hasn't taken their foot off the gas pedal," said Derek Brown, an internet analyst at Cantor Fitzgerald. "Yahoo has been very slow to recognise changes in the marketplace, in a nutshell... They were late to recognise that search itself was becoming a big deal."
Yahoo executives often describe their outfit as a media company, creating and packaging content. But efforts at original content have largely been a disappointment. Yahoo announced in December that Lloyd Braun, the Santa Monica-based head of Yahoo's media and entertainment group, was leaving the company. Yahoo has also jumped on the social media bandwagon, integrating user-generated content from its large number of users into its network of sites and services, but it has failed to establish any significant partnerships with other social-networking companies to expand its advertising system.
"Yahoo seems to struggle with the idea that they should have content they own and control," said Danny Sullivan, who founded the Search Engine Land blog. "Only lately has Yahoo come to the idea that they could put ads on other people's properties. Google has done that far longer. With AdSense, Google has made the web their playground... Their job is to take a percentage of everybody else's ad revenue."
Despite all that gloom, there are still some bright spots at Yahoo. It is still the most visited site on the internet, and executives there say ad sales from the company's new search advertising platform, Panama, are expected to boost revenue in coming quarters. "We are very pleased with the initial progress of Panama," chief financial officer Susan Decker said in an interview last week. Revenue per click, which reflects how much advertisers are willing to pay for the keywords associated with the ads, did not decline as much as was expected, Decker added.
But ultimately, as the revenue gap grows, the idea of Yahoo catching Google gets harder and harder to imagine.
"Google has an advertising platform that allows it to monetise it at a rate nobody else can," said Scott Devitt, an analyst at Stifel Nicolaus.
