Yahoo searches for some new answers

Yahoo’s deepening dispute with Chinese partner Alibaba, has only added to Yahoo’s woes over the past few months. In its first-quarter earnings, Yahoo, which has failed to wrestle share from rival Google, despite a much-lauded partnership with Microsoft, reported that search revenue dipped 18 per cent to US$388 million in 2010, from $473 million a year before. This was partially offset by display revenue growth of 16 per cent to $567 million. Investors, both present and potential, will also be listening for clues as to the fate of Yahoo’s Asian assets, which the firm is under pressure to monetise. In China, meanwhile, Alibaba’s transfer of a major online asset to chairman, Jack Ma has highlighted the pair’s dysfucntional relationship and once again shows Yahoo’s weak negotiating position, despite a 43 per cent share in the company.

Brand health diagnosis:

Antony Yiu, MD (Hong Kong)/regional director (North Asia), iProspect

One of the biggest problems for Yahoo is the erosion of its customer base and failure to monetise its acquisitions over the past few years.

I think a key problem is the lack of integration of its acquisitions into its product offering, as well as the improvement of its advertising platform to server advertisers.

Granted that with the Yahoo Microsoft partnership, the Yahoo ad platform is now being replaced by Microsoft AdCenter, but Yahoo needs to find a way to make it easier for advertisers to buy ads on one single platform across all of its properties, including Flickr, del.icio.us, Yahoo mail and even Yahoo messenger.

Those are the four key properties that still have a pretty good user base.

As internet users now shift to use vertical search to look for content
in specific format, it is important for Yahoo to identify ways to efficiently monetise its properties other than search.

Its growth of display business has remained relatively strong. One of the key reasons for the success of Google lies in the ease of use of its AdWords platform to place ads on its acquired properties, including YouTube, AdMob (mobile apps), and on mobile devices. This is something that is lacking in the old Yahoo advertising platform.

Rosemary Lising, GroupM MD, APAC, Group M Search

Yahoo is building opportunities beyond search as a key driver of future revenue. This is a necessity due to Yahoo’s decision to enter into a joint search advertising agreement with Microsoft in July 2009. Yahoo will have to prove that content, video, mobile, display and social can be the revenue drivers for a leading internet player, especially with the audience reach, services and content that Yahoo has globally.

What the Yahoo brand has going for it is scale, reach and a proven community of consumers. Leveraging these aspects in an innovative way will drive further growth. Understanding the behaviour of these consumers and how they interact with Yahoo’s current and future products (content, video, mobile, communities, commerce, etc) will be key to driving opportunities. Unlocking relevant behavioural data with scale is core to its success. The ability for Yahoo to deliver an integrated ecosystem where advertisers can easily purchase relevant and targeted digital solutions could help Yahoo regain its leadership position.

Yahoo actually came in better than Wall Street expectations, although reported profit and revenue fell in Q1 2011. The question will be whether Yahoo can fulfill the vision that it has set forward. The clock is ticking.

This article was originally published in the June issue of Campaign Asia-Pacific.