Yahoo! Boss Bullish About Online Adspend

29 January 2001

Addressing delegates to the World Economic Forum in Davos this weekend, Tim Koogle, chairman and chief executive of Yahoo! talked-up the importance of the internet as an advertising medium.

The web, he claimed, is "invaluable" as an advertising medium and will take a growing share of the global pool of advertising – despite the recent slowdown in ad revenues experienced by online operators.

Koogle also opined that advertising had a “key role” in the future of the internet: “"It is only a question of which companies can get to scale in audience size to attract advertising." Larger players will attract strong advertising support for significant numbers of "well managed, niche" internet companies.

Still in crystal ball mode, Koogle said that within ten years "the internet as an infrastructure will be woven into people's lives". At that juncture, "what people do on the internet will be more important than how they get on the internet".

But he also conceded that the online medium must now face up to normal business realities after the Klondike-style euphoria of the late nineties. Cash flow and profits are now the watchwords.

Underscoring Koogle’s point, Hasso Plattner, chief executive of German software group SAP, confessed that his company had lost, "a quarter of a billion dollars in after-tax money" in an online joint venture with Intel based on a "utopian" business model.

"We have seen too much greed over the past three years," said Plattner "We're back to gravity. Businesses have to be profitable and self-financing after a short while. Companies have to learn this - that's the advice we are giving to young companies today."

News source: Financial Times