Yahoo! Moves Further Into A Bad Business

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Yahoo! (YHOO) got the deal to sell display ads for big UK social network Bebo. The site has 11.6 million unique visitors in the two geographic areas that Yahoo! will take on–the UK and Ireland. But, Bebo is interested in the US portal handling all of its inventory which is 38 million users worldwide, according to Reuters.

But, the display advertising market is slowing. Analysts recently said total online ad revenue for the current quarter will grow 25% with the search engine part of the market driving most of the upward movement. Pacific Crest says Yahoo!’s banner ads are tracking down 10% for Q3.

The Bebo deal highlights Yahoo!’s lack of willingness to break away from its display ad roots. Doubling down on a bad business is not what Wall St. wants.

But, it is what investors are getting.

Douglas A. McIntyre