Despite the dotcom bubble going bust due to the heavy reliance on advertising as a revenue stream, Yahoo Inc continues to believe that such a business model is sustainable.
S I Lee, regional vice-president (south Asia) of Yahoo Inc, says, “advertising would continue to be the primary source of revenue for the company, and contrary to the general perception, this model is quite sustainable.”
According to Lee, the online advertising adspend in India is in the region of $10 million, which accounts for less than one per cent of the total adspend in the country. This is half of the global average where the total online adspend is around two per cent as of now.
With India generally following the global trend although with a lag, the country is expected to follow suit in the same direction. The company believes that online advertising would ultimately command a share of somewhere between 8-10 per cent of the total available adspend, similar to a market share that radio advertising currently commands.
At present, more than 50 per cent of Yahoo’s revenue is derived from online advertising. The company’s other businesses contribute the rest.
The company also earns its revenues from e-commerce activities like online shopping, auctions, premium services, which include online games, movies on demand, and revenues from SMS services in collaboration with cellular companies.
The company has decided to keep its basic e-mail and chat services free of cost, but would levy some charge for the premium services.
While not deviating from its basic revenue model, the company has decided to target the corporate sector in India for its webcasting services and its Enterprise Portal (EP) business.
This part of the business, which has been reasonably successful in other parts of the world, would also be launched in India shortly. However, the consumer market would continue to be the core focus as of now.
For its SMS services, the company is in active discussions with other mobile players to forge alliances. Its alliance with Orange has been highly successful. The company is expected to announce more alliances on this front soon.