Is Yahoo Loosing it?

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 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.

A New Sheriff in Town?

As I have said in other posts, I like Yahoo and always have. As Google went from goofy to scary, Yahoo stayed approachable and business friendly. However, during recent years, Yahoo has missed more boats than a ferry passenger with a faulty alarm clock. As mobile and social exploded, they sat on the sidelines. A decade ago, they were the leader in search, and now they run a distant third. Even with those missteps they have remained one of the most powerful online brands and maintain dominance in several key verticals like sports and news.

I have lost count of how many CEOs they have had over the last couple of years. It might be as many as half a dozen. So, I read with interest the reports that Yahoo has recruited none other than Marissa Mayer from the Google-plex to head up Yahoo. It’s quite a coup. Mayer ran search as search at Google grew to become a powerhouse. She was involved with Google+ and all things location based. In theory, she has the product smarts to really pull the ailing giant together.

The question is, does she have the high-level business experience to take on such a huge job (in addition to becoming a new mom by Halloween).

I wish her nothing but good luck, which she will no doubt need to take on such a massive task. If I could lobby for something, I’d plead for a real local strategy at Yahoo. Local has been somewhat rudderless for a while. The concern is that compared with news or sports, local will continue to be the red headed stepchild at Yahoo. Every indicator points to local and mobile being crucial to so much online growth in the near future, yet Yahoo to date has played a minimal role.

The great thing about local is that it makes money. Social media is much harder to monetize. So, Marissa, by all means do sports, do news and try social. But please focus on local/mobile. It is where the money is, and we are in desperate need of a true local leader.