A market meltdown would likely do the most damage to online advertising revenues of Yahoo and AOL, according to a report.
“We think the brunt of any hardship to come will be borne disproportionately by the weakest players, namely Yahoo and AOL, in a pattern that is already starting to emerge,” Bernstein Research analyst Jeffrey Lindsay wrote on Wednesday.
The report said the same won’t be true for Google, MySpace, and Facebook, whose year-over-year advertising revenues in the third quarter of 2007 gained 62 percent, 135 percent, and 200 percent, respectively. That compare with same period growth of 16 percent for Yahoo and 10 percent for AOL, well below the U.S. industry average of 25 percent.
A bright spot, the report said that online advertising should benefit from the move away from traditional ads. The analyst also said that online advertising in general would “get off relatively light” compared with the beating wrought by the technology bubble burst of 2001. Also, paid search, Google’s business, is seen as less likely to be affected by an economic pullback.
Display advertising, according to the analyst, is more susceptible to market pains because brand advertisers retain rights to scale back in the event of economic downturn. That doesn’t bode well for Yahoo and AOL, which have greater exposure in display advertising.