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Highlights from Yahoo’s Analyst Day Presos May 18, 2006

Posted by David Card in Media.
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Despite Wall Street’s apparent reaction to Yahoo’s annual analysts’ day forum, Yahoo is well-positioned to continue as a — if not the — leading online media company. Following are some observations and highlights from the presentations on Wednesday:

The Pitch

CEO Terry Semel used the framework of Four Big Bets Yahoo is making for the next five years as a way of sketching out Yahoo’s positioning and strategy. For comparison, the big bets Yahoo made over the last five years were: graphical/display advertising (take that, Google), paid search, broadband access partners rather than being in the access business (take that, MSN and AOL), and “deep product focus”, i.e., lots of products simultaneously/synergistically that are consumer- rather than technology-driven (take that, Google?).

The new bets:

Next-generation consumer experience. Ajax/Flash, but also social media, and the blend of licensed, original, and consumer-created content. I find this notion compelling.

Monetization. How can monetization be a bet? I can’t explain this one. Semel used “Panama” (the new paid search infrastructure) as an example, as well as mumbling something about making make/buy/partner decisions regularly.

Platforms. Not the way I mean “platforms,” (products and services that others build on, that power economic ecosystems and foster network effects), although Yahoo is sympatico with that concept. Rather, “platform” in Yahooic means technology infrastructures that are modular, scalable, re-usable, and globally deployable.

Beyond the Browser. Being a “three screen” portal and adverising medium: PC, TV, and mobile. Yahoo really only talks about two of them these days. No TV.

Here’s what’s really going on.

Yahoo Positioning Vs. Google

– Yahoo is the only big player who can support both branding and direct marketing online. Yahoo says the industries that appreciate this early are auto, retail, travel, and financial services.
– Yahoo has a real portal strategy: content plus communications plus services plus community. Yahoo will leverage that into consumer engagement — the new brand advertiser buzzword — and into customer understanding, that will both improve its lackluster performance in search, and position Yahoo to lead the world, eventually, into behavioral targeting.
– Online marketing knows how to do awareness, and how to feed purchasing. Yahoo will learn how to do consideration and purchase intent, and in so doing, tap different ad budgets.
– Yahoo believes in human beings as well as algorithms. That works in content and in search. “Social search” — Yahoo Answers — and perhaps even some contextual dis-ambiguation will be search differentiators.

Yahoo and Social Media

Yahoo is overly defensive about MySpace. MySpace is way ahead of Yahoo in creating a network of communities of teens and young adults, if not monetizing it. Yahoo’s positioning vs. MySpace and social network startups:

– Yahoo doesn’t do fads.
– Yahoo will create a better environment for trust for consumers, and a more comfortable environment for advertisers.
– Yahoo won’t do consumer created content that advertisers don’t like.
– Yahoo will do it where the info can be leveraged (reviews, cheap content creation, targeting data)
– Yahoo can carve up its big audience into smaller communities. No evidence of that so far. Geocities? Yahoo 360? Yahoo Groups? I think not. At least not yet.

What Yahoo’s Not Worried About

– Microsoft. Yahoo claims it doesn’t need to make a fresh billion-dollar investment because it’s been doing that already. And AdCenter puts too many eggs in one basket — Yahoo’s platform will be a federation of systems, rather than a single system.
– AOL
– Entertainment content exclusivity. Studios, etc. will come to where the audience is.
– Traditional media companies getting online. No network. No massive reach. Yahoo’s genre properties are usually in the top three as category leaders. (This is true.)

Where Yahoo Thinks It’s the Best

– Best story for advertisers (brand plus direct marketing). I don’t disagree.
– Best combo of reach and targeting. Very powerful argument for all three portals, though none are delivering deep targeting yet.
– Best at online programming. Well, second best. AOL’s still better, but at risk of losing its advantage.
– Best at trust (consumer and advertiser). I can’t measure that yet.

Other Tidbits

– No big shiny new toys. Home page redesign is cool if not envelope-pushing, and I hadn’t seen the syndicatable financial charts “badges.” They’re nice too.

– Precious little talk about the paid content & services business.

– Yahoo is using even more absurdly large (PWC?) global online ad spending figures than Microsoft. Let me re-iterate: there is no possible way that the US makes up only 50% of online ad spending.

– Anybody that was impressed by the Alibaba China story, see me; I’ve got a great deal on some bridge properties.

– Yahoo thinks geo-targeting is the first of the new x-targeting schemes that advertisers will actually spend much money on. Our latest exec survey pretty much confirms that.

– Yahoo described a paid search analytics concept it calls “assists,” as in basketball. A tool to track the longer term impact of higher level search terms. Cool if it works.

– Yahoo did not give a very granular Panama roll-out roadmap. Q3 US roll-out for both the core platform and the advertiser tools (Q1 int’l). Q4 US “marketplace”, i.e., results sorted by something other than price. No $$ impact till 07.

– Yahoo has some intriguing science-lab research projects going on what some would call “credibility econonmies” — incentivizing trust ranking, etc. a la eBay ratings.

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