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Analyzing More Ad Market Data Points

Ross Levinsohn of Fox Interactive says that Fox is seeing no signs of an advertising slowdown (per Mediapost), a tidbit suggesting that Yahoo!’s problems may be, well, just Yahoo! problems.  Meanwhile, Lowe’s preannounced modestly disappointing results and blamed them on the housing market, as did homebuilder Lennar.  Washington Mutual recently said that the inverted yield curve and rising interest rates have dampened mortgage origination (no surprise), and consumer home equity withdrawals are apparently down year over year.  And the American car companies continue to suck wind.

Put it all together, and Levinsohn’s observation does not necessarily support the view that Yahoo!’s recent news is a Yahoo! problem instead of a market problem.  Fox is presumably less dependent on advertising from financial services companies than Yahoo is (specifically, mortgage companies), and, with a younger demographic, it is also presumably less dependent on ad spending tied to the housing market.

Will Yahoo!’s weakness continue?  Is it a market problem that will soon affect other companies, including Google?  Is it the first sign of a slowdown that will spread to other industries?  Still too early to tell.  I continue to think, however, that the Yahoo! news and other data points above are consistent with the start of a general market slowdown, one that will likely gather momentum if housing prices continue to fall.  The recent drop in rates may help housing prices stabilize (or even rise modestly) in the next few months, but the downward trend will probably resume eventually.

Put differently, I still think the Yahoo! news is a canary in a coal mine–one that the market has, so far, largely ignored

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