Certain social networking sites, such as MySpace and YouTube, are cornering the market, and Yahoo! is certainly feeling the effects; due to the glut of competitive advertising on social networking sites, Yahoo!'s advertising sector is slowing down. The long term risk to Yahoo! is immense, as users may be drawn away from them and towards other methods of advertising as Yahoo!'s customer base recedes, bringing a downturn of revenue to the site. Since social networks grow at double the rate of traditional internet sites, this appears to reflect the direction of future growth in the industry.
As social networking sites continues to expand their popularity, investment in new audiences seems to be the focus of the day for Yahoo!, amid speculation that the search engine is in talks to buy MySpace's main rival, Facebook.
Facebook, who have over 10 million registered users worldwide, launched in early 2004 and claim to be the number one photo sharing site within college and high school networks. If talks progress and the sale goes through, Yahoo! will effectively drive more consumers to its site.
Although Yahoo! still claims to be the most visited site on the web, MySpace's home page became one of the most visited pages on the internet in August, and Yahoo! has to react fast to combat this competition by investing to perform alongside it.
The speculation surrounding Yahoo!'s interest in Facebook clearly reflects the nature of Yahoo!'s commitment to reacting to change within the web community, as well as providing an important lesson on how to compete and create growth in the long term. It's a del.icio.us opportunity for the search engine!
