At the same time, YouTube has had problems diversifying the type of advertiser it attracts. For the most part, YouTube has done a great job of bringing in media ads -- lucrative Hollywood blockbusters and primetime TV programs. There are worse problems for a site to have, but with YouTube's wide array of content and its large audience, it should have been doing better at bringing in marketers from other high spending categories, including automotive, health/wellness and fashion.
Relying Less on Media: Diversity of the advertiser base on YouTube increased substantially in the fourth quarter, Schachter said. The share of media advertisers finally fell well below 50% to 37% in Q4 after several quarters within the 50 to 55% range. "It remains to be seen if this is brief fluctuation or the beginning of a trend but it’s difficult to argue with YouTube’s ad quality, as the site’s highly engaging oversized Masthead ad unit sold 91% of the days in 4Q’12 -- and sponsored video units running on the remaining 9% of days," Schachter said in an analyst note.
Room For Improvement: While Yahoo was able to run a greater number of high-quality homepage ads, login page sales were down both from Q3 and year-over-year. Generally, oversized/custom ad units rose on a year-over-year basis to 36% of total homepage ads in Q4 from 26% during the same period the year before. For 4Q as a whole, Schachter observed an ad unit on the login page on 63% of days, down from 75% in 4Q’11 and 73% in 3Q’12.
AOL Positive Signs: AOL's homepage display trends broadly improved on both a year over year and sequential basis. Sales of oversized/custom ad units were up substantially from both the prior year to 52% (vs. 28% in Q4 2011 and 31% in Q3). The share of purely brand-focused ad units also rose nicely: 59% in Q4 (vs. 38% in 4Q 2011 and 55% in 3Q). AOL also appeared to reduce the number of cheaper direct response-focused advertising (16% in 1H 4Q ’12 vs. 35% in both 1H 4Q’11 and 1H 3Q). Considering the past stagnation of AOL's owned-and-operated ad revenues, as opposed to network ads, the improvement could augur well for the portal when it reports earnings next month.
Amazon Challenge Emerges: Just as Yahoo and AOL have posted greater success on the homepage ad front, the companies will face an additional challenge this year from Amazon. That comes on top of the battle for display dominance between Google and Facebook. This is the first quarter that Macquerie has been tracking Amazon's homepage ad performance, so it's only guesswork as to whether Amazon will represent a big challenge or a small one.
Schachter is bullish on Amazon's display plans.
He pointed to a "meaningful increase" in oversized/custom units, with 17% of observations in Q4 vs. 1% in the year before (and 3% in the most recent Q3), mostly in the form of integrated click-to-expand upper banner units "which we had not frequently seen before."