Digital marketing growth faces slowdown

After almost constant announcements of new advertising launches from the internet giants, this week's profit warning from Yahoo! seems like an anomaly.

But the Yahoo! finance director, Susan Decker, told a technology conference in New York that its profits for the third quarter of this year will come in at the bottom of forecasts, blaming weakness in car and financial services advertising.

Google, meanwhile, has posted great results so far in 2006, with profits more than doubling in the second quarter, but even its dominance could be affected if this hiccup turns into a long-term trend.

Car-makers have been particular supporters of internet advertising in recent years, but companies such General Motors and Ford are cutting costs across the board as they face increasing losses in core North American markets.

The growth of online advertising and agencies should not obscure the fact that Yahoo!'s share price has fallen by more than 25 per cent this year and the company has consistently failed to meet Wall Street revenue expectations across 2006.

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