September 7, 2011
Carol Bartz was fired by phone from her post as CEO of Yahoo! in what must have been a Trump-worthy conversation with Roy Boystock, Yahoo!'s Chairman of the Board. Tim Morse, Yahoo!'s current CFO will act as interim CEO and part of a larger executive committee to manage Yahoo! operations until a replacement CEO is found.
I like Yahoo! And I was optimistic about Bartz taking the reins from Yahoo!'s founder Jerry Yang, as I thought it signaled an desire by Yahoo! to aggressively course correct its languishing strategy. But now I'm just disappointed. Three more years have passed and Yahoo! is the same sinking ship it was when Bartz took the reins. Here is my take on Yahoo!'s situation. Yahoo!:
- Has terrific online advertising capabilities. The online opportunity is *still* a huge and growing one; we project interactive marketing will near $77 billion by 2016. Yahoo! has tremendous traffic and user engagement globally which populates its monster user database that it is a pro at mining on advertisers' behalfs. It's ad labs scale testing and optimization. Its reach and available inventory is massive. And its ad marketplace is making real-time ad buying mainstream.
- But it can't lock in on a focused corporate strategy. This is Yahoo!'s greatest challenge: it is everything…a content company, an email engine, a database marketer, a publisher network, an ad server, an ad management platform, but with no overarching vision of why all of these things and how they fit together. I've told Yahoo! a number of times, that individuals base their perception of Yahoo! on what part of Yahoo! they use. A consumer uses Yahoo! Mail, so she thinks of it as her inbox. A small business marketer uses it for local directory listings, so it has no understanding of Yahoo!'s audience targeting services. The problem with this, is that the real value of Yahoo! comes from its collected services — its ability to be a concierge for all user online needs, or to provide a suite of multi-channel marketing services to advertisers. Yet, Yahoo! can't adequately describe or deliver against its holistic value.
- Lacks follow through. The strategic initiatives that do get attention seem to come and go without any real fullfillment. For example, where do Yahoo! APT and the Open Social initiatives stand which were the big strategic drivers of 2008? Yahoo! has released APT 2.0 but to no real results and without clear direction. Is Yahoo! a media company using APT to improve its own yield? Is it a tech company hoping to sell its ad serving capabilities to third-party publishers? Furthermore, the Yahoo!/Microsoft search partnership was supposed to free up Yahoo! resources to innovate around its search business. But Yahoo! is actually losing share of user searches to Bing.
- Is over-invested in its legacy business. Besides Bartz, Yahoo! underwent significant leadership turnover — in sales, marketing, product development, technology — during the last three years. And has picked up some great talent (case in point: in his first weeks in the job new product officer Blake Irving created a systematic approach to product vetting and development). But I'm afraid Yahoo! spent so much on and saw so much early success with its its legacy businesses (like email, like its ad networks, like Yahoo.com) that it is hanging onto them too tightly. I don't think Yahoo!'s challenge is a lack of smart execs. I think it is a cultural resistance to innovation which might steer Yahoo! away from its traditional offerings.
- Comes off bland. This is partly its lack of strategic focus (see point 2 above), partly a communications issue — it doesn't promote what innovations it does do. But related to my above point, I'm afraid Yahoo! *is* bland, stuck in its former glory days. Its developments focus on refining and reintroducing old products instead of inventing. (By comparison Google Labs is developing Jetson-era things like driver-less cars…wow!) This makes Yahoo! only a tepid environment for curious developers to go. And it doesn't present Yahoo! as much of a visionary to financial and market analysts.
- Has no plan for The Splinternet. Yahoo!'s strengths lie in its display advertising business (not even so much search anymore). But the future is about user access to content and experiences across devices that may have unique formats, operating systems, user interfaces. Yahoo!'s future device plans are limited and its content expectation hinges more around the portal model — users will come to Yahoo.com — than syndication — content will distribute in multiple formats into multiple environments.
So where does this leave Yahoo!? I think on the sales block. My bet is that an investment bank picks it up and sells off the parts. Yahoo! can't explain why the sum of the whole is better than the parts anyway. So I think in this case, the parts will actually be better valued on their own.
What does this mean for interactive marketers? Right now, Yahoo's biggest sell for you is "reach," which is moderate value as you consider all of your available options. I think Yahoo's greatest priority right now should be to solidify its value to media buyers, as online advertising is its life blood and is at extreme risk of losing advertisers to options that are easier for them to grock.