Brand Health Check: Yahoo
By Andrew McCormick, marketingmagazine.co.uk, Thursday, 29 September 2011 10:30AM
When David Filo and Jerry Yang set up a site in 1994 entitled David and Jerry's Guide to the World Wide Web, they could not have foreseen that their company, subsequently renamed Yahoo, would become a billion-dollar business before the turn of the century.
Seeing the need to organise the web into a navigable format, the founders set up a directory and search engine, which proved a massive hit with consumers and advertisers.
All this is a far cry from 7 September, 2011, when Carol Bartz, the no-nonsense chief executive of Yahoo, was sacked over the phone by the company's chairman.
In her two-and-a-half years in charge, Yahoo ran a $100m marketing drive around the 'It's You' positioning.
Bartz also brought in Microsoft to, more or less, run its paid search platform and built Yahoo's strategy around premium content.
Yahoo's share price has plummeted during her tenure, however. Microsoft made a $44.6bn offer to buy Yahoo for $31 a share in February 2008, but last week, Yahoo's shares were worth less than half of that.
Yet, while revenues have also dropped this year at Yahoo, profits are up year on year in the first six months of 2011, suggesting that all is not lost.
We asked Scott Gallacher, chairman of The Marketing Society Digital Network and an adviser to internet companies, and Paul Doleman, chief executive of iCrossing and a former Microsoft marketer, to devise a rescue plan for Yahoo.
Diagnosis: Two industry experts on how the company can upgrade its performance
Scott Gallacher, chairman, The Marketing Society Digital Network
In online what you do is your brand, how you do it is your marketing. When your comparison set is Google and Facebook, you are in for a tough time.
If Yahoo tries to compete with them, it will prove fatal. My plan would be to go East, go mobile, go video.
Yahoo is often considered an Asian company, headquartered in the US. Its holding in the Alibaba Group, providing a significant foothold in China (something its competitors have failed to do) and partnership with Softbank in Japan, aligned with its strong position in southeast Asia, supports this.
Focusing on this growing market would help Yahoo drive traction, and capture big advertisers who are looking for global presence online.
This market also lends itself to the mobile platform, which is the future for the industry.
The battle for the desktop is old news. The war for the mobile internet is just beginning, and much of it will be fought in Asia. Yahoo should also maintain its rearguard position on desktop (it still grew by 2% last year).
Most successful digital brands require a chief executive who acts as a product visionary and a living brand (Jobs, Zuckerberg, Page, Pincus, etc). Yahoo will need someone with ego and vision. That is the company's biggest challenge.
- Concentrate on Asia. The battle for the West has been fought and Yahoo has lost.
- Focus on mobile. Yahoo is ahead of its rivals in this area and must drive home its advantage.
- Hire the right leader. Jerry Yang couldn't do it, Carol Bartz couldn't do it. Yahoo is under pressure to recruit a high-profile chief executive and needs to move fast.
Paul Doleman, chief executive, icrossing
Despite the doom and gloom in the press, Yahoo is not in as bad a place as some might say. While it is losing search share, its display advertising business grew by 5% last quarter. That was less than analysts expected, but it is still pretty impressive in such a market.
Yahoo still generates billions of dollars in revenue, and continues to create opportunities with developments such as its ad network business.
However, it is clear that the company does face a marketing challenge. I think its problem is that the consumer no longer knows what the brand is about. Yahoo has a great range of content, services and properties, but I don't think this is being presented to consumers in a coherent way.
People think about Yahoo either in terms of a legacy search provider, as an email service, or maybe as a news provider, but none of these really sums up what the business is about. Yahoo needs to do something bold. It must communicate what makes it different from Google, Microsoft and AOL.
Perhaps it should even consider giving up on algorithmic search and becoming a social search engine.
Yes, it's difficult to turn around a ship as big and as unwieldy as Yahoo, but it's vital that it does if it wants to survive and thrive in the next stage of the web's development.
- Work out how exactly Yahoo differs from AOL, Google and Microsoft and push the message hard.
- Give up on competing with Google on search and develop a new kind of social engine.
- Be bold and confident in everything. Yahoo is still a successful business – it must tell people that story.
This article was first published on marketingmagazine.co.uk
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