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Priorities for Yahoo’s new CEO January 10, 2012

Posted by David Card in Uncategorized.
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Last week Yahoo announced it had hired Scott Thompson, currently the president of eBay’s PayPal business, as its new CEO. Thompson doesn’t have any media or advertising experience, and he is still stuck with Yahoo’s dysfunctional board. But he’s got product and technology cred, which means Yahoo should be fixable.

Being a portal that combined content, communications and web navigation used to be a great business. But search and social media have steadily eroded the value of a portal as a launchpad to the web, so Yahoo needs to focus on its current identity as a premium content destination site.

With that in mind, here’s what Thompson should do to get Yahoo growing again in order to retain its position as one of the biggest players in online advertising.

Top priorities

  • Forget about being a technology platform, a social media company or an ad network. Yahoo doesn’t have any compelling services it could deliver through APIs to an ecosystem of third-party apps. It is using Facebook effectively to promote its own content,  though it could do more with Twitter. And as much as I like the potential for a premium advertising exchange to raise the value of its remnant ad inventory, Yahoo should focus on doing that through better targeting and richer ad formats and sponsorships.
  • Target better. In theory Yahoo should have great marketing targeting ability based on analyzing all the information it has on its 700 million users: content interests and real-time behavior, authentic email identities, search behavior that is critical for retargeting display ads. Thompson may not be an ad guy, but he’s a data guy (he sits on the board of Splunk) and has said that data analysis will be key for Yahoo. I interpret that to mean Thompson must make Yahoo the best vehicle for targeting display advertising next to high-quality content. That means hiring big data scientists and investing in targeting and yield-management technology, and it sounds like Thompson’s on board.
  • Focus on brand advertising. Yahoo could adopt AOL’s big, rich media “Devil” ad format and then leave AOL in the dust with brand advertisers by servicing them and their agencies to death. It’s already at work on advertiser relations, but it needs to accelerate the process. Yahoo should hire more-expensive ad salespeople while Yahoo U.S. head Ross Levinsohn rebuilds relationships with advertisers and agencies. It should reassign the content farm team to creating quality sponsorship advertorials. Yahoo can also do more cross-media event sponsorships like its Sundance Film Festival promotion.
  • Bulk up on quality content. Lately Yahoo is less focused on selling itself than on unloading its Asian assets: There are tax advantages to trading those for other properties. Names like WebMD and The Weather Channel have come up, and they would both be great additions for Yahoo — WebMD for its task-focused ad-friendly audience and The Weather Channel for its everyday utility and cross-media opportunities. It might also want to look at youth or technology content brands that aren’t already part of bigger media companies; SB Nation is putting together an interesting network of properties.

Innovation opportunities

Thompson is already working on talent retention by talking up innovation. At PayPal, 40 percent of resources reportedly went toward projects with longer-term payoffs. Thompson might have a lot of ideas about e-commerce, but he should stay away from social commerce and the crowded daily deals space unless Yahoo can better target offers aggregated from third-party deal companies.

He is probably thinking hard about mobile, too. Rather than display ads, mobile advertising will likely center on search and offers for some time. There may be some opportunities for sponsored content. Yahoo’s phone efforts should focus on content and email rather than ads. Its IntoNow product — a sort of Shazam for TV — is truly innovative, and it presents ad syncing and interactive TV content opportunities that will pay off on tablets sooner than on phones (and way sooner than via Yahoo TV Widgets). Yahoo’s other new tablet app, the Flipboard-like Livestand, seems rough around the edges but supports the kind of big, glossy magazine-style advertising that Yahoo must deliver.

Here is how partners and competitors should evaluate Yahoo in the next six to nine months:

  • Big advertisers and agencies should get plenty of love from Yahoo, and they should demand proof of ad effectiveness. They should ask Yahoo to foot some of the bill for expensive media planning studies.
  • Google barely participates in brand advertising and seems happy to collect ad network fees rather than own more content inventory. Eventually, Google could try to replace Microsoft as Yahoo’s search technology supplier via its better conversion rates, but it might have to do more data sharing with Yahoo.
  • Facebook wants to raise the rates it charges for ads via targeted brand advertising but needs to offer better formats and sponsorships. Its role in content discovery is safe.
  • AOL and MSN need to execute a strategy similar to Yahoo’s, though each is more invested in being an ad network. Any Yahoo failure with brand advertisers is an opportunity for them.

Question of the week

What technologies should Yahoo acquire from outside?
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What the Google-Facebook Battle Is Really About May 16, 2011

Posted by David Card in Uncategorized.
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Facebook’s silly scheme to plant anti-Google privacy stories further highlights the bitter rivalry between the two companies, but it also points at what they’re really fighting over. The competition is not so much about each company’s core business — search vs. advertising-powered social networking — as it is about future products and services, and each company’s respective role as a technology platform provider. And potential partners and competitors need to know which battles these two competitors will take seriously so they can adjust their own priorities and investments.

Here are the key areas of competition for Facebook and Google:

  • The “interest graph:” In contrast to a social graph of information about relationships between people, an interest graph based on topics might actually be a better indicator of purchase intent than what friends — who may not have similar tastes — like. Facebook Likes and Google search results feed such a graph — though Twitter may have more easily collectible info here than either.
  • Web navigation: Facebook hasn’t proven it can drive shoppers to commerce sites the way Google can, but it’s becoming an important source of visitors to online media sites like the New York Times, CNN and HuffPo. Consumer platforms depend on habitual use, so Google can’t risk losing ground as an overall web-discovery vehicle.
  • Communications: It’s unlikely social media will completely replace email, but both Google and Facebook are competing to be a user’s unified communications hub by integrating mail, chat and posts with contact lists and presence management. Such a hub would generate constant use and potential customer lock-in, and be a rich source of contact data.
  • Identity management/authentication: Facebook tries to enforce a single, authentic user identity, but it isn’t very good at letting that user manage his relationships between different types of friends or groups. Google does offer a sign-on service, but its Profiles are mostly for search personalization. Authenticated identities could play a big role in payments systems and professional/career relationships.
  • Ad networks: Google ad networks dominate search and are strong in direct-marketing display. In theory, Facebook’s Like network could serve context- and behavior-based advertising on sites web-wide. Facebook’s complaint that Google scrapes social information without explicit permission might be based on potential privacy legislation. One bill under consideration would give companies with formal consumer relationships more freedom to use data for advertising. That would give a company like Facebook an advantage over third-party ad networks.

Build, Buy or License?

Facebook doesn’t seem interested in building a conventional search engine, but Google sure is trying to build out some Facebook-like technologies. Google recently introduced +1, a competitor to Facebook Likes, where users recommend search results, ads and, eventually, web pages. Website owners will no doubt flock to +1 for its potential influence on Google search ranking. But, faced with yet another link-sharing option, users may ignore +1, especially since Google lacks an established equivalent of Facebook’s news feed to display links.

Neither company likes to license technology or data from other companies, with the exception of Facebook’s Microsoft partnership. Google seems to have some arrangement with Facebook that gives it access to Facebook company Pages, but the two have long bickered over sharing contact information.

Since they don’t like partnerships, how about acquisitions? Business Insider has a laundry list for Google, but two are big and might also appeal to Facebook:

  • Twitter: Either company’s ad business could instantly monetize Twitter better than Twitter can itself. But neither may need to buy into Twitter, as it seems pretty easy to get access to Twitter data.
  • LinkedIn: The professional social network is stingier about sharing data, has a working business model and could play an important role in identity authentication. But it’s about to go public, so would-be acquirers would have to act fast.

Question of the week

What are Facebook and Google really fighting over?