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The Yahoo! Turnaround Formula

Posted on Friday, Jan 12th 2007

Red Herring included the possibility of a buy-out of Yahoo! this year among its top predictions. ‘Business Week’ rated Terry Semel recently as one of the highest paid chief executives with one of the worst returns to shareholders.

And yet, I have said it for a long time, that Yahoo! is a superbly underleveraged asset that if played properly, could return gold.

Today, TechCrunch reports on one of Yahoo’s big (and rare) wins versus Google: Yahoo! Answers. It is indicative of an area in which Yahoo! remains strong: Content and Community, versus Google’s stronghold: Search.

So, the first order of business for Yahoo! is to understand that brand advertising – CPM-based banner ads – is also big business, and concede the broad CPC-based Search business to Google.

Then, focus on the 3Cs : Content, Community, and Commerce.

And, they need to be segmented 3Cs. Not the haphazard, all-over-the-place 3C that Yahoo has today, which makes it impossible for a sales rep/account manager to have a structured conversation with an advertising customer. If I am a Nike brand manager and I want to market to three segments, College Kids, Teenagers, and Pre-Teens, Yahoo’s properties are not organized in a way that allows me to understand how to distribute my money among these properties. And Yahoo’s sales reps cannot explain; they don’t know themselves.

For all its morale-boosting effect, the Yahoo! Answers property is yet another horribly understood and explained ad vehicle which does not clarify how I am to reach my desired segment using it. This puts it in the category of junk CPM, in the order of 50 cents. But it doesn’t have to be this way, and Yahoo! Answers could just as easily fetch $30 CPMs.

This brings us to the fourth C: Context. In what Context am I asking the questions? Is the Community that is relevant to that Context, around me, so that I can actually tap into their knowledge?

Yahoo! hardly needs to do anything drastic; it just needs to reorganize its entire portfolio into Segments and Lifestyles, and align the 4Cs of each segment so that the people interested in advertising to a particular segment can reach the community in a focused way, in Context. If they want to sell groceries to people reading recipes, they should be able to reach them right there. Or, if they have gadget geeks researching cell phones, they should be able to access that eyeball, in Context.

And this would be the point to bring back Search. Constrained-domain Search. Vertical Search. In-context Search. And, Search with a customized UI specific to that segment. Example: I am a petite woman, looking for designer jackets by Armani, Yves St. Laurent, or Gucci. Give me a search engine interface that allows me to put in sizes, colors and brands, not just free-form keywords. I am interested in precision. I am interested in personalization.

Yahoo: You can give me Context. You can give me Personalization. You can give me Content, Community, Commerce, and Vertical Search.

But you don’t. You keep disappointing me. You keep chasing Google’s tail, investing where they are strong, rather than where you are strong.

What a waste. What a colossal waste.

I am shaking my head.

Related Reading:

* Connecting With Your Intimate Bot
* Web 3.0 = (4C + P + VS)
* Yahoo Please Put Up A Fight
* Google’s Achilles Heel
* Yahoo & Web 3.0
* Yahoo Must Acquire Shutterfly

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The key to really rich segmentation is having a good way of also analyzing the underlying data and usage, which is becoming more dynamic.

http://newspeedwayboogie.blogspot.com/2007/01/segments-and-data.html

AW Saturday, January 13, 2007 at 9:56 AM PT

If you can’t beat them, then break them.

Why should MSN,Yahoo be worried about google’s leading position in search segment?
Why even spend billions on msn, yahoo search when they clearly know that they are still years away from google?
Why should msn,yahoo be worries about google’s lion marketshare in CPC,cpm market segment?

Chnage the way you look at google and you can atleast get closer to google.

Google couldn’t repeat its success story in any other market segments. It unsuccessfully failed at ‘froogle’, ‘google checkout’, ‘video’
Google overpaid for youtube and somehow applied balm to their bruises.

Earlier we thought that google will take on craigslist,shop.com,ebay with one ‘froogle’. It failed. Again with googlecheckout, we thought it will beat paypal. It miserably failed again.

Whay yahoo/msn should do is learn from ebay.
They need to break the search market and wean people away. How?
Today none searches google for auctions. Because they know ebay is there fir them.
Similarly yahoo/msn should create services similar to shop,shopper.com where people should find good deals and prices for virtually any product. This way bulk of the daily visitors on google will move to other properties, where they know what they are looking for.

Slowly they should create niche services for each market and reduce google’s usability.
Today wikipedia is knowledge source. Already people started going directly to wikipedia for all their needs. Similarly answers.com should be upgraded as one stop shop for any query.

Google should basically be a place where users should go as a last option. This really takes long time to achieve but is not impossible.
Look at google’s flops and get confidence and move on.

Hope this was not boring.
–sri

sri Wednesday, January 17, 2007 at 3:32 PM PT

[…] So, in the same vein that I have written about Yahoo’s turnaround formula, let me sketch a hypothesis for Palm, which I also think could have a bright future ahead. […]

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[…] I wrote 4C: Yahoo’s Turnaround Formula, in which I suggested that Yahoo organizes itself by segments, and puts the 3C (Content, Community, […]

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[…] I have written a few pieces already addressing the disjointed nature of the web, whereby, you go one place for content, another for community, and a third for commerce, the most notable of these is the popular, 4C: Yahoo’s Turnaround Formula. […]

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[…] You can read about it at Techcrunch. Has Susan Decker read 4C: Yahoo’s Turnaround Formula? […]

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[…] She talks about how the traditional delivery of content on websites meant that an average user would have to go to one place for content, another for community, and a third for commerce. This is what she terms as the “3 C’s”. Lately, Context (the 4th C) has come into play and orchestrates a big part successful web content. She uses the case study of Yahoo – and how that successfully turned around the company. […]

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[…] have written extensively about Yahoo’s Turnaround Strategy. I know Sue has read the piece. It’s a great opportunity for Yahoo to clinch its leadership […]

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Yahoo! should leverage their 200M + user base.

Jitendra Friday, June 22, 2007 at 6:40 PM PT

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CEO Search At Yahoo! Commences - Sramana Mitra on Strategy Monday, November 17, 2008 at 7:12 PM PT

A big, overlooked part of Google’s success is they have thousands of people like me who’ve built our own web sites and blogs to sell our ideas, products and/or services while selling advertising with AdSense.

I did 20 years of product development at HP’s R&D labs and left in 1998 to mine gold in the gold rush called the internet. What better way to learn than to get my hands dirty? Anyway, I think you are on to something with Yahoo answers as it is very similar to what I did in an R&D role at Suite101 where I assembled experts to answer questions about investing then sold a few investment related products and advertising. 101 tried to emulate the model by selling the writing of their other writers, but they didn’t have the scale or quality of experts I assembled so it failed and they went to a pure AdSense model. I went off and did it on my own for a nice income for my investing related topic. I still think what I’ve done to make a profit every year since I left HP can be done with any category if done correctly. Yahoo, Google and MSN have all tried but they were missing one key ingredient to make it a success.

Kirk Lindstrom Wednesday, January 14, 2009 at 7:31 AM PT

Hi Sramana …Have you seen the Glue Search Product which has been launched by Yahoo in India? I really liked it as a user (I am quite a Yahoo Fan!)..and it seems to be a step forward in the direction you are proposing in your Web 3.0 – “Verticalised” strategy for Yahoo. I am curious to know your thoughts on this new search version and on what more Yahoo should be doing along these lines.

If you search on many keywords, the results page being displayed actually changes based on the “context” of the keyword…try searching for “Amitabh Bachchan” (Movie Star) on in.search.yahoo.com and then search on “Infosys” (Top IT Company) and see the results…it recognizes that Amitabh Bachchan is Movie Star and one section on the page is an artist biography…it also understands that Amitabh Bachchan is a keyword in the Entertainment Category and hence the page displays an Ad by Big TV ( A Reliance Entertainment Company)…now when you see the page for “Infosys” the page contains Stock Quotes and Reuters News Feeds…and it doesnt show the Big TV Ad (maybe they didnt have an Finance Ad in their inventory and so none is being shown).

It gives me the feeling that Yahoo can massively scale this product to generate a “Micro-Vertical” page dynamically on the fly..and for each keyword…the user could potentially get the best information and relevant engaging content (including the usual web results) which is specific to the “context” of the keyword!

Look forward to hearing your thoughts!

Vikram Thursday, January 29, 2009 at 6:14 PM PT

I haven’t seen this yet. Will check it out. Thanks for the pointer.

Sramana Mitra Thursday, January 29, 2009 at 8:48 PM PT
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