Yahoo, Google Cut I-Gaming Ads

In the latest round of fallout from a U.S. federal grand jury investigation into the interactive gambling industry, Yahoo and Google, operators of the Internet's two largest search engines, have announced plans to stop taking advertising from gambling-related Web sites.

Officials with Yahoo said they will severe ties with the industry in the United States but will continue to carry advertising on the companies global sites, which are published in numerous languages and marketed all over the globe.

A spokesperson for Yahoo said they are pulling the ads because they don't want to be a target of the grand jury investigation, which has resulted in subpoenas handed out to media outlets, portals and gambling site operators. He also cited a desire to clear things up with online gambling before it would go back to accepting online gambling advertisements again.

Google is pulling online gambling ads in all markets.

David Krane, a spokesman from Google, said the policy change was part of an effort to "reflect the growth of our company and ensure we provide the best search experience for our users and advertisers." He would not comment on whether the company had received a subpoena.

Many mainstream media outlets have consistently scoffed at running I-gaming ads. Some of those that have carried them, such as the Travel Channel, have pulled them within the last six months because of legal uncertainties.

The Yahoo and Google moves will be damaging for an industry already under pressure in the U.S. from credit cards companies and the banking industry, but not crippling. Few, if any, I-gaming operators are dependent on the two heavyweights.

"It was less than 10 percent of our advertising when it was at its peek," one operator said. "It hasn't been at that level for nearly two years now."

Likewise, the search engines won't be greatly effected by the new policies. Neither would cite specific percentages, but both said I-gaming wasn't a major source of advertising revenue.

Both said the ads will be phased out, with Google hoping to have them gone by the end of April and Yahoo hoping to have them off its sites within two weeks.

As of Monday morning, searches on both sites still turned up lengthy lists of online casinos under the "sponsored results" heading, where paid advertisers get top billing.

The Yahoo decision didn't come as much of a surprise to many inside the industry. Overture, a Yahoo subsidiary that provides paid search listings to sites, informed its clients nearly three months ago that it would no longer be placing ads for online casinos and sports books.

The Overture move also affected MSN, which used the firm for its advertising placement. Forrester Research projected that the absence of I-gaming ads on the three search engines will translate to the loss of hundreds of millions of impressions.

Lycos, another popular search engine, stopped carrying online gambling advertising months ago.

Chris Charron, an analyst for Forrester, said online gamblers tend to be more likely than non-gamblers to respond to banner ads and other paid listings. Not only are they known for clicking on the ads, but also going through with purchases or playing on sites because they saw an online advertisement.

"These sites rely upon their paid search listings and their banner ads to generate the traffic that is their lifeblood," Charron said. "They're going to have to work that much harder to get their potential customers to come through their virtual doors now."

With the U.S. advertising market becoming harder and harder to crack for operators, many of them are likely to turn to spam and other areas of marketing, Charron said.