For Yahoo, momentum, not management, a problem

The trials and tribulations of the Yahoo executive suite have been well chronicled in the media off late: from the recent exit of their sales ace to Terry Semel being replaced by co-founder Jerry Yang, as the top man on the totem pole. The management shuffle aside, Yahoo has a bigger problem on its hand: the traffic, be it search or total visits is beginning to resemble New York Yankees in the Major League Baseball rankings.

Folks from Citibank analyzed the data collected by comScore, and found that Yahoo has started to lose ground to Google in terms of total visitors. [digg=]

The total number of visitors to various Google properties was up 18% (year-over-year comparison) to 536 million, with Microsoft getting 528 million (up 5%), and Yahoo being #3 with an actual decline – about 2% (year-over year comparison) in the number of monthly visitors to 470 million. This is the second month of consecutive declines for Yahoo.

To put things in context, the worldwide Internet traffic grew 9% in the month of May 2007, while US saw a 3% increase in the traffic for the month. In US, Yahoo remains #1 with 131 million visitors, up 0.3%, the lowest we have tracked. Google is at #3 position with 120 million unique visitors, up 15% year-over-year.

Chart of traffic growth

Like most, I do feel that comScore and its methodology leave a lot to be desired, though they are a good trend-indicator. The trends don’t bode well for Yahoo. If monthly unique visitors page views are (flat to) down, then this could (indirectly) impact Yahoo’s bread-and-butter brand & display advertising business, as the company indicated in their most recent chat with the analysts. (Maybe Wanda Harris Millard, the outgoing Yahoo sales ace was robbed of her job.)

Yahoo has already lost the search battle and is losing the mindshare as well. It trails in mobile search business as well. In mobile space, M:Metrics reports that smart phone users prefer Google over Yahoo when it comes to mobile services, especially in US and UK, where Google commands 62.5% and 31% reach. Yahoo in comparison has about 33.5% and 11% reach respectively.

In an increasingly competitive marketplace, Yahoo seems to be losing momentum, especially in areas where it has been traditionally strong. It is going to be a long slog for Jerry Yang and his crew before Yahoo is restored to its growing ways – it that is at all possible.

Update: Mappingtheweb has another interesting take on Yahoo’s current state of affairs.