Open Source: Make It Work, Yahoo!

The Web giant should focus on what it knows best—audience

Mike Shields

Oct 13, 2008, 12:03 AM ET

For some strange reason, I recently remembered the 1988 After School Special Terrible Things My Mother Told Me, and it made me think of Yahoo.

As I recall, in one scene, the actress who played Vera on Alice dismissed her teen daughter Julia’s attempt to dress cool, telling her to “work with what you have.” As cruel as it was to say to an insecure adolescent, it actually makes for sound advice for the embattled Web giant.

According to Nielsen Online, Yahoo’s sites reached 70 percent of all Americans in August: 117 million unique users for an average of three hours and 20-plus minutes. That’s staggering reach for any media company.

So why when I mention Yahoo does one think of failed Microsoft takeovers, languishing stock prices and executive departures? And now the Justice Department?

Certainly, Yahoo has had more than its fair share of negative news over the last year and a half—ever since its earnings started going south in the face of the Google juggernaut, which in turn forced the company to replace former CEO Terry Semel with founder Jerry Yang.

What has Yahoo done to repair the damage, besides multiple confusing reorganizations? In September, the company released a study touting the importance of “starting points” among Web users, i.e., sites that users visit frequently and return to quite often. Funny enough, Yahoo is a starting point-type site! In fact, becoming a user’s starting point was one of several key initiatives cited by Yang after his famed first “100 days” as CEO last year.

Following that deeply insightful “people tend to like their favorite things” report, Yahoo held its Advertising Week shindig, attended by Yang, president Sue Decker and Mad Men’s John Hamm, to unveil APT—a new ad platform that purports to do everything.

APT aims to eliminate all those repetitive, tedious processes from online advertising, theoretically placing the company at the center of all transactions conducted in the space. Decker and Yang referred to APT’s potential impact with the same enthusiasm as scientists when they introduced The Pill back in the 1960s, using phrases like “transformative,” “game changing” and “seminal.”

So far, no agencies have signed on to APT, only the San Jose Mercury News and the San Francisco Chronicle newspapers. Online ad business execs I spoke to said they see it as another gussied-up ad-exchange platform. If so, that makes Yang and Decker sound prone to hyperbole, which speaks to a deeper problem: a lack of focus and flawed executive communication. To hear Yang and Decker tell it, everything is always going according to plan: The much-hyped Panama ad platform is a huge success. We’re just testing the outsourcing of search to Google to see how it goes. We were always willing to sell to Microsoft—we just had to make sure we kept search and display ad sales together.

I often wonder why a company known for pioneering display advertising is going so hard after the tail-end of the long tail, while deemphasizing its strength as an audience magnet.
Despite all the company’s perceived troubles, Yahoo Sports (38 million uniques), Yahoo News (41 million uniques) and Yahoo Finance (21 million) are the giants of their respective categories. And while some properties haven’t taken off, Yahoo has proven it can use its network to build new audiences quickly—like Yahoo Health (7 million uniques) and the gossip site omg! (10.5 million uniques).

To me, it’s clear Yahoo knows how to launch and program the hell out of content sites, which major brands love. Jerry, Sue, why not tap into the expertise of your very smart recent hire—ex-MSN and current Yahoo sales chief Joanne Bradford—and go from there? So what if your own attempts at original content have failed. Sell search to Google or Microsoft, and instead invest in companies that have cracked the code. Why not snatch up the super hip tech-enthusiast Web TV firm Revision3? Or snag a company like EQAL, the upstart social media-centric production firm that did lonelygirl15? And since audience fragmentation is only accelerating, you could even diversify your portfolio into the mid-tail, with purchases of companies such as the frat boy-centric video site Break.com or a rep firm like Gorilla Nation?

Of course, if you do add to your brood, please treat your new children better than Julia’s mother did.    






Mediaweek senior editor Mike Shields covers the digital space.

Open Source: Make It Work, Yahoo!

The Web giant should focus on what it knows best—audience

Mike Shields

Oct 13, 2008, 12:03 AM ET