Media Forum: Is Yahoo! on the right path?

Can it provide a compelling advertising proposition, Alasdair Reid asks.

Carol Bartz's vast and growing fan club was slightly disappointed with her most recent public run-out. The 60-year-old Yahoo! chief executive (she succeeded the Yahoo! founder Jerry Yang in January) is already renowned as a no-bullshit straight-talking gal in the best thigh-slapping cowgirl tradition with a mouth on her that'd make a docker blush.

If she were to feature as a guest star in an episode of The Simpsons, they'd surely have her spitting tobacco, loosing off rasping great farts and pissing like a horse. Her favoured method for keeping subordinates on their toes is continuously to "kick them in the balls". Figuratively speaking, we hope.

So her subdued performance at last week's results presentation was rather unexpected. In fact, her most notable utterance was terribly corporate: "We established a clear, simple vision to be the centre of people's lives online, and we're backing that vision with important initiatives to create 'wow' experiences for our users." On the other hand, there wasn't much excuse to be upbeat - revenues in the quarter to 30 June were down 13 per cent. And the centrepiece of the new vision - a redesigned homepage also unveiled last week - has not exactly excited the unreserved admiration of online pundits.

Yahoo! remains the world's second most-visited web brand, but there are those who wonder if it really knows where it is headed. Its attempts over recent years to build a search product to rival Google's have been less than awe-inspiring.

Along the way, it has rejected merger overtures from Microsoft - another digital giant that has struggled with search. But at least Microsoft has a new initiative, Bing, in that area. So perhaps the two in tandem might make a bet-ter fist of the search challenge - and reports suggest that Yahoo! is set to adopt Bing as its favoured search engine. But equally worrying from Yahoo!'s point of view was its relatively poor showing in the display market.

Granted, times are tight - but should we continue to have confidence in Yahoo!'s future as an advertising medium? Hopefully, Damian Blackden, the president, digital of Omnicom Media Group EMEA, says: "It definitely needs to focus on search and a partnership with Microsoft would help. And it needs to focus on technology. The opportunity is still there but it needs to move more quickly. It needs to reinvent itself rather than refining the current offering.

"For instance, it has been woeful in social media. When it closed Mash (a social network service that was withdrawn, due to lack of interest, less than a year after it launched), no-one really noticed."

That's true, Jason Dormieux, the managing director of MEC Interaction, says. He adds it's worrying, perhaps, that Yahoo! doesn't seem to have a strategy for long-form video content - especially as its major competitors are starting to organise themselves on that front. But his instinct is to be upbeat. He adds: "I think it realises what the challenge is and there are signs that it is prepared to do the right things."

Which is pretty much how Pete Robins, the co-founder of Agenda 21, sees things too: "My feeling is that media owners in the digital space get too hard a time of it. It's not as if they're traditional media owners where everybody pretty much knows the rules of the game for the market they're in. Digital media owners don't have the answers. Nobody has the answers - because things move so quickly."

But that shouldn't blind us to the fact that the forecast for Yahoo! looks variable, Will Phipps, the7stars' head of planning, argues. He says: "The new homepage is a return to what a portal should be - a gateway or filter to the good stuff. But what will really interest us is whether Yahoo! will be prepared to change its trading model. These days, advertisers are less willing to accept without question the unproven contribution represented by digital display. Cost-per-engagement and cost-per-acquisition deals are more suited to the reality of the current marketplace."

- Got a view? E-mail us at campaign@haymarket.com

MAYBE - Damian Blackden, president, digital, OMG EMEA

"It's still a leading player and it has assets with strong potential - such as its behavioural targeting offer and its mobile offer. The problem is that those assets are not being leveraged sufficiently."

YES - Jason Dormieux, managing director, MEC Interaction

"I think, in advertising terms, it understands it needs to step up. It has been making more effort to talk to agencies and doing the right things in terms of talking to (a wide range of) planners."

YES - Pete Robins, co-founder, Agenda 21

"True, compared with Google, Yahoo!'s efforts in search haven't been great. But I don't think you can argue that the rest of what Google does is amazing. So no-one can really say they've completely cracked it."

MAYBE - Will Phipps, head of planning, the7stars

"In search, it's suffering from the continual march of Google. Bing will have given Microsoft a boost in search too. But Yahoo!'s main portal has some good things going on - the new homepage allows you to build in the apps, gadgets and feeds that you want."

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