Revenue per page view is a key metric in the online advertising
industry, in which Yahoo (
) competes with Google (
), Facebook, Microsoft (
) and AOL (
). As these companies drive new traffic to their sites, they look
for opportunities to demand higher advertising rates.
While Yahoo continues to lose share in the online advertising
market, a broader shift in marketing dollars to the online space,
coupled with an emphasis on more engaging content (like videos),
could lift advertisement rates for Yahoo.
We currently maintain a
$17.88 price estimate for Yahoo stock
, which is about 5% above market price.
Advertising Dollars Moving Online
We expect online advertising to continue to take share from
traditional media like TV, newspapers, and radio. With that, we
also anticipate that advertisers will consolidate their marketing
around big companies like Google and Yahoo, which provide them with
unmatched scale and higher visibility.
Yahoo's Increased Focus on Video Programming
Yahoo has recently taken a few initiatives to increase its video
programming content. It is improving the amount and quality of its
video content across various media verticals including sports,
news, finance and entertainment. Videos carry higher
engagement levels and hence provide better ad monetization
Can Yahoo's Revenue per Page View Rates Rebound?
Yahoo's revenue per thousand impressions (
) has been on the decline for the last few years, falling from
around $1.4 per 1,000 page views in 2007 to around $1 per 1,000
page views in 2010. Going forward, we anticipate the recent trends
highlighted above to help drive a recovery in Yahoo's RPM
However, RPM levels could stagnate if Yahoo is unable to capitalize
on these opportunities, prompting downside to
our $17.88 price estimate for Yahoo stock
. To illustrate this downside risk, we estimate roughly 5% downside
to our price estimate if RPM rates stagnate around current
You can examine this scenario, and others, by dragging the trend
line in the modifiable chart above.
See our full analysis and $17.88 price estimate for