As the harsh reality of the Internet takes a toll on dotcoms around
the world, portals anticipating a decline in online advertising dollars
are looking for new ideas to check falling revenues, according to the
IDC.
Internet companies, such as Yahoo, that rely heavily on advertising are
expected to suffer first, a report by the IDC said.
"With fewer dotcoms flush with dollars, spending for online ads could
diminish, casting doubts on the ability of stellar performers such as
Yahoo to uphold their revenue," the report added, "On the other hand,
Yahoo may be benefiting from reduced competition among providers of ad
space. Its revenue for the September quarter grew to USdollars 295.5
million from USdollars 270.12 million in the June quarter."
However, during November, shares of the Internet portal fell to their
lowest level in two years on concerns over a weaker Internet advertising
market.
The difficulty of the online ad market, analysts have warned, also means
Yahoo is likely to miss its revenue targets in coming quarters.
In light of this, the portal is looking to generate revenue from other
channels, such as from visitors to its site.
"Watch for Yahoo to embrace the broadband world and ratchet up its
activity as a component of corporate intranet portals. Yahoo is also
actively expanding in Asia and growing its list of merchants on its
shopping portal.
"As caution creeps into the dotcom world, the hope is that the best and
brightest will survive and thrive. Some will face challenges from the
brick and mortar companies attempting to add another channel, while
others will combine forces with appropriate brick and mortar
counterparts," the report said.
Other portals are also following the likes of Yahoo.
Hotmail introduced traditional Chinese, simplified Chinese and Korean
languages to its email service with the aim of attracting an additional
37 million regional users at the rate of 10 million each year.
To draw more users to its localised service, Microsoft's MSN also
launched a series of Hotmail marketing programmes in Hong Kong and
Taiwan, and an upgrade to its service to version 3.5.
Other overseas-based portals are also looking to expand their presence
in Asia as the number of Internet users in regional countries soars.
Lycos Asia is to set up a subsidiary in Thailand to further its Asian
presence. The subsidiary is to operate a Thai-language site, which will
be launched at the end of November.
Chinese Web portal Sohu.com had also attributed weaker-than-expected
quarterly revenues to a sluggish online advertising market. It said it
was training its sales force "to be more effective".
The company's CEO Charles Zhang had said he expected the online ad
market to gain momentum as more Chinese companies warmed to the
concept.
In the meantime, Mr Zhang said Sohu.com would increase its slice of the
pie by promoting itself as host to "more Web traffic than any other
company in China" - a claim that has been given credence by its
acquisition of portal ChinaRen in October. Of the three rivals Sina.com,
Netease.com and Sohu.com, the latter has had the greatest success at
raising ad revenues because, according to anlaysts, it had moved quicker
than the others to adopt an aggressive ad sales strategy.
Meanwhile, a Merrill Lynch analyst reportedly described the Internet
advertising environment as "horrible", while Gartner has predicted 85
per cent of Asian dotcoms will go bankrupt or be swallowed by bigger
Internet companies or more traditional and stable companies by 2004.
