Yahoo's Strategy

In what appears to be a nod to Google's superiority in ad networks, Yahoo CEO Terry Semel had this to say about Yahoo's plans for Yahoo Publishers Network (Yahoo's full conference call transcript is available on SeekingAlpha's InternetStockblog.

"In search marketing, our monetization efforts can be grouped into 3 categories. First, we are expanding our content match services through the Yahoo Publishers Network to take advantage of the growing number of small publishers on the web. We plan to add new features to beta over the coming quarters including search and enhanced ad targeting. We believe the service will ultimately position Yahoo as one of the preferred advertising partners for small and medium-sized publishers. Second, we are focused on improving RPS to better matching in relevance algorithms. While our matching initiatives will largely benefit coverage, we’re also focused on improving tools to drive higher relevance and click through. And third, we are increasing the number of easy-to-use tools for advertisers and publishers, so they can buy more keywords, touch more creative and add more listings faster. "

In my opinion, Yahoo has other issues as well in its search ads given its reluctance to give up paid inclusion.