Monday, February 04, 2008

Yahoo, MS deal a challenge for dotcom cos in India

A potential combination between Microsoft and Yahoo! is likely to erode online advertisement revenues of some small dotcom companies in India while Google could lose some of the pricing power in the country, industry watchers said.

The presence of two strong content aggregators will also make the market tighter for full-range content behemoths — horizontal Web portals — that largely depend on online advertising revenues, they said. Already, the likes of Sify are moving away from the horizontal portal model and are trying to offer transaction-based services.
“Google has achieved a strong position in the Indian market as far as ad spends are concerned, which means that a majority of the effects of the acquisition would be reflected on the desi players,” said online research and advisory firm JuxtConsult co-founder Mrutyunjay Mishra.

Estimates suggest that Google, Yahoo! and the distant third MSN together command about 75% of online advertising budgets in the country, valued at about $120 million. “The merger would ensure the survival for MSN and allow the online branch of Microsoft to move to an ad-driven model, much popularised by Google,” said digital marketing firm Pinstorm CEO Mahesh Murthy. Read More>>