Most tech savvy computer, smartphone, and tablet users rely heavily on all aspects of the web – search, portals, web-based emailing and messaging. How can investors take advantage of this hot area of the technology sector? There are many stocks competing for users in web search, web portals, and web-based mail and messaging. Is Yahoo! Inc. (NASDAQ:YHOO), Facebook Inc (NASDAQ:FB), Google Inc (NASDAQ:GOOG), LinkedIn Corp (NYSE:LNKD), Yelp Inc (NYSE:YELP) or even Microsoft Corporation (NASDAQ:MSFT) attractively priced? Which, if any represent a compelling investment?
Yahoo! Inc. (NASDAQ:YHOO) plans to use services such as AdSense and AdMob from its main rival, Google Inc (NASDAQ:GOOG), to increase sales from the content on its pages. The company has signed a non-exclusive agreement with Google for contextual advertisements. According to Sara Gorman, a spokeswoman of Yahoo!, the ads would appear on the company’s website for sports, finance, autos and news. The agreement comprises of the company’s own sites and certain co-branded web properties. The clients of the company’s sites won’t notice any major difference in the ads.
Marissa Mayer, the Chief Executive Officer of Yahoo!, said that the company plans to increase advertising impressions on more than a dozen of its top sites. The agreement would allow the company to increase its revenue from these pages. Managing Director at RBC Capital Markets Mark Mahaney said, “I assume they wouldn’t be doing this is if they didn’t think they can better monetize their traffic. There should be a near-term positive.” He rated the company’s shares at outperform. The company also said that by adding Google to its list of contextual ads partners it can match its customers with ads that are more meaningful.
According to EMarketer estimates, Google would continue to maintain its top position in the $17.7 billion U.S. market for displaying ads, with 18% market share, while Facebook Inc (NASDAQ:FB) captures 15% share, and Yahoo!’s market share has declined to 8%.
Ms. Mayer also said that she plans to work with large companies such as Apple Inc. (NASDAQ:AAPL) and Facebook. She said, “We are able to work with some of these players, who have a lot of strength, to really bolster our user experiences that we offer on the Yahoo! site.”
Mayer plans to consolidate the company’s offerings to a dozen core categories. They include mail, search, weather and other “daily habits.” According to Mayer, the content is important, but her main aim is to increase user’s attraction to the content. She said, “Our biggest business problem is impressions, can we get growth happening there. The way in a consumer business to grow revenue is grow usage or prices. We’re growing prices, we need to grow usage.” She believes that impressions come with traffic and it is the company’s content that is going to increase traffic.
Microsoft will operate a U.S. advertising campaign influencing clients to drop Google’s Gmail for its own online email services, increasing its rivalry for internet users. Television, print and online spots will commence featuring of the word “Scroogled!” in the colors of logo of Google, criticizing the operator for scanning the text of email messages to tailor ads to users. In July 2012, Microsoft unveiled Outlook.com to slowly replace its free online email service Hotmail. According to ComScore’s November data, Hotmail has less than half as many users as compared to other online email services Gmail and Yahoo!. Microsoft’s Bing, a search engine that competes with Google, is also trying to increase its customer base in the U.S. by winning over Google users.
According to Chris Gaither, a spokesman for Google, “Advertising keeps Google and many of the websites and services Google offers free of charge. We work hard to make sure that ads are safe, unobtrusive and relevant.”