I was at the Adtech show last week, meeting with the great and the good of the online advertising world, and it was to say the very least a very interesting few days. The largest single topic of discussion could be broadly characterized as “what’s up with Yahoo?” The current excitement comes from the changes we have all seen since their new fearless leader took charge. For the longest time, Yahoo and Google have pursued quite different search growth strategies. Google has focused on growing the Google.com brand, driving as much traffic to the mother ship whilst offering only the breadcrumbs of revenue represented by AdSense to the wider world. It is theoretically possible to get hold of a real Google search feed to offer to end users, but you have a stronger chance of being elected the next Pope after this new one than getting hold of one.
At the same time, Yahoo built a syndication network; where at one point, pretty much any site or tool with a pulse could offer Yahoo powered results to online searchers. The results of the strategies speak for themselves… Google search giant… Yahoo not so much. Obviously that’s not the only thing that made the difference, but it was a factor. Yahoo, having taken the syndication route, did a pretty good job of doing that and in so doing spawned an entire industry of folk dedicated to offering Yahoo results to all comers getting chubby at the Yahoo buffet… then came regime change.
Marissa Mayer is a very smart cookie, and as an original Googler is no doubt used to the Google way. She shocked pundits early in her rein by down playing the importance of search in the future plans of Yahoo (search …smerch…who needs it!?), and supposedly spurred on by the denizens at Bing (who power Yahoo search), she has “set her cap” (I’m watching a lot of Game of Thrones right now so tend to lapse into old English on occasion) against syndication. High quality search traffic which used to score 8 all day long now scores 5 one day, then 7 the next, then 4.5, then nine. Clicks jump from 30 cents to 3, and back for no obvious reason. It’s not just us seeing this… all over AdTech sharp young men with shaved heads, and intense women with power purses were hurling themselves out of high windows or could be seen sobbing into their third Martini at lunch.
The net result of all this weirdness has to be that syndication revenues are cratering at Yahoo. That wouldn’t matter if they already had 68% of the market like Google has, but for a relatively distant third place which has relied on syndication for so many years, this change in strategy is a lot like the Republicans deciding that they don’t need the Old White Guy vote in favor of a rainbow TuTu… it’s cute… but the other guys already have that model and who is going to pay the bills? The hope in the conference was that someone would get bored or freaked out and things would return to normal… but if the new normal is this, the next AdTech San Fran may well be five guys outside the Starbucks at the Moscone center.