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A Yahoo Battle And A Google War

By: David Utter

We saw a couple of unusual events today. Google shuttered a service where Yahoo was simply doing a better job drawing an audience; then it was revealed how Google would attack Yahoo's strength in brand advertising.

Yahoo's Battle, Google's WarYahoo (YHOO) took an opportunity this afternoon via a spokesperson to make sure that anyone who may have missed the news about Google (GOOG) shutting down its Answers service by the end of 2006, along with pertinent stats about Yahoo Answers:

- Worldwide numbers for Yahoo! Answers and Knowledge Search (18 countries and 8 languages): Yahoo! Answers has 60 million unique users worldwide and 160 million answers.

- US/English-speaking countries numbers for Yahoo! Answers: Yahoo! Answers has 14.4 million unique users (per comScore October 2006) and 60 million answers.

It isn't often that Yahoo can kick sand in Google's face. But in true Hollywood blockbuster fashion, Google has pulled out the kind of threat to Yahoo that in the movies would have M interrupting James Bond on vacation and telling him to haul his butt to MI-6 ASAP.

Google has been quietly building up its resources for a push into branded advertising, with its eyes on the Fortune 1000 companies that live on their brands. Where Google has dominated paid search, Yahoo has been particularly adept at bringing in name brands for display advertising.

But the revelation by dot-com mogul John Chow that Google has been hand-picking websites to carry profitable Display Advertising Network image and video ads has to be viewed as a challenge to Yahoo, already suffering the effects of soft financial and automotive advertising.

This is more than Google ringing Yahoo's bell with a punch. It's a stringing of a carillon that will play a mournful tune for Yahoo's big revenue draw, should Google find purchase in the marketplace. Google has built ad teams in Chicago and now in New York, the advertising capital of the world.

Even though this would be another form of online advertising, part of virtually all of Google's revenue stream, the giddiness over Google's stock would be even greater should it achieve Gatesian-level dominance in display ads as it has in contextual ad delivery.

One wouldn't think this from the stock market today. Shares of Google dropped 4.85 to 484.65, while Yahoo finished up 4 cents at 27.04. It will take time for Google's efforts to have bottom-line impacts, which will make the next two quarterly financial conference calls for Yahoo and Google must-attend events.

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