Idiot's Guide to Fixing Yahoo

Written by R. Scott Raynovich - Light Reading

Wednesday, June 11. 2008 at 11:10 AM EDT 3 comments

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The great CEOs are always focused on products and product marketing. Three that come to mind: Steve Jobs, Bill Gates, and Eric Schmidt. The products are: Mac and iPod, Windows, and Google Search. What's Yahoo's great product? What's its marketing focus?

If you follow the Web channels you get the daily chatter on Yahoo executive gossip, like how they "bleed purple" or other minute, useless details about Sue Decker rambling on at yet another public appearance. But not many people are talking about how Yahoo's product strategy remains a mess.

If I were one of the shareholders voting on the proxy, here's a question I would ask: If Yahoo is going to remain independent, what kind of company is it going to be?

The company's main weakness, as I see it, is in defining and marketing its product strengths. The executives love to talk about Yahoo (and themselves), but they don't talk much about individual products. You would never see this from Apple or Microsoft.

This can be fixed, even by an idiot user like me. Here's my Idiot's Guide to Fixing Yahoo.

Tell Us What You Are. Microsoft is the leading OS and applications maker, and it focuses on improving those products and communicating to its customers about what its doing with them: Windows, Word, Excel. Google leads the world in search, and it is militantly focused on communicating the strengths of Google search. Apple makes great consumer electronics products, and Steve Jobs is always talking about innovation of the Mac, the iPod, and the iPhone.

What's Yahoo and what are its innovative products?

I think I know what Yahoo is, but I don't know if Yahoo knows what it is. I tried to find this on Yahoo's corporate information page, but I couldn't. I did find a page on Yahoo's values, which wasn't very informative. I thought it was ironic that one of Yahoo's values was: "We are flexible and learn from our mistakes." Are executives really demonstrating that value?

On the company info page, Yahoo describes itself as this:

"Yahoo! began as a hobby and has evolved into a leading global brand that has changed the way people communicate with each other, conduct transactions and access, share, and create information."

Oh, I see -- Yahoo is a hobby. That's a terrible description. How does a brand change the way people communicate? Is that actually true? No, of course not. Brands don't change anything -- they represent something. It's the products that change things. Talk about the products.

Under, "What We Do," I found this:

"Yahoo! powers and delights our communities of users, advertisers, and publishers -- all of us united in creating indispensable experiences, and fueled by trust."

Again, vague and bullshitty. Your business is delighting people? No, your business is actually about providing useful media, information, and applications, and then selling advertising. Why not just say that?

The fix: Yahoo should focus on its strengths, and talk about what it really does. Yahoo should describe itself as one of the world's largest interactive media companies, which develops information services and applications that reach the largest audience of global Internet users.

Tell Us How You Get There. The media loves Sue Decker and Jerry Yang. You can go to the blogs daily to read at length about what Sue Decker does in the minutes leading up to a panel appearance. An actual headline from today: Yahoo Exec Spec Swirling Again; Weiner Returning From Paternity Leave But Will He Stay? My headline: "What's Jeff Weiner Doing? We don't know."

I've actually read up on exactly what Sue Decker has been doing. She's been talking a lot... about reseller deals. Let's analyze this. From a press release issued on June 4, this is what Sue Decker had to say about Yahoo's direction (emphasis mine):

"Yahoo! is helping to accelerate the transformation of how display advertising is both bought and sold," Decker told the audience earlier this morning. "First, we are developing the technology, products and platforms that are designed to help advertisers find the right audiences and publishers find the right advertisers. Second, we are partnering with publishers to secure and monetize inventory that advertisers and agencies find desirable. And third, we are partnering with advertisers and agencies to channel demand to the right consumer."

I've noticed that Yahoo -- and Decker -- talk a lot about what they think they are doing, but they don't talk much about actual products. So, Decker started this press release about "products and platforms," but then the press release doesn't actually discuss any of those products or platforms. It goes on to talk about a bunch of reseller deals.

Facts: The big "deals" that Sue Decker mentioned on June 4 were 1) selling advertising for WalMart; 2) selling advertising for newspapers; 3) working with Havas Digital, which I've never heard of.

The entire message to me, in this poorly written, conceived, and packaged "announcement," is that "we are advertising resellers." Is that really an innovative strategy, or are you just telling people that you are a commoditized, third-party middleman?

Again, this is a marketing problem. A big one.

The fix: Identify some core, innovative products, and talk to the market about why they are important. Develop a product marketing strategy. Don't make reseller deals central to your marketing, even if they do make money. And if you issue a press release, for the love of God, make sure it's well written.

Market Paid Search. Remember Overture? Yahoo bought it for $1.6 billion. It was a pretty good company, doing quite well. The stock was a winner. It was arguably second to Google in paid search. Not a bad position to be in. I don't hear anything about Overture anymore. I don't even know where it went.

The strange thing about this is that I am an Internet publisher, and I do some business and marketing with Google. I'm not completely satisfied with Google, and I would really like some advertising alternatives, especially in paid search. I would like to hear the Yahoo Overture/paid search story, but it's hard to find. Where is Overture? Is it Yahoo Search Marketing? I think so. According to Yahoo, "Overture is Now Yahoo Search Marketing."

Yahoo Search Marketing looks to be targeting small businesses. When you read the Webpage, it doesn't look like a really important business, even though we know it is. Why isn't Sue Decker talking about what's unique about Yahoo Search Marketing instead of advertising reseller deals with WalMart? Is it not unique? What's with the name -- Yahoo Search Marketing -- and why is so bland? Is the service bland? That's what it feels like. Frankly, I just don't know, and that's a huge marketing problem.

The Fix: Rename "Yahoo Search Marketing" something much sexier. Call it Yahoo iSexyMarketing, or something. Anything except what it is now. Talk about it a lot, instead of touting reseller deals as core to your company strategy. Develop a marketing strategy around why people would use it instead of Google. Is it cheaper? Can you talk to people on the phone, rather than relying on robots? Does it work better? Is it less evil? Does the search engine have more integrity?

Tell us what it is, Yahoo, please.

Upgrade Your Legacy Products. Even as an idiot, I still know that I "touch" Yahoo in several places on the Internet, and that this experience has degraded over the years. Although this is anecdotal, I think it's important, because I spend way more time on the Internet than most people. I'm an Internet power user.

I think I was one of the first Yahoo users. I remember in the mid-90s when I discovered the Website and it was just a collection of "Directory Listings" -- there were maybe a dozen categories, and in some cases a category had no more than a few links.

Back then, I may have used Yahoo Search the way I now use Google. I'm not really sure why I couldn't switch back, as Yahoo has much better search capabilities now. Is it because Google is really better? Maybe. Maybe it's just marketing. At any rate, Yahoo's touch-point with me on search has declined over the years, and the company appears to be somewhat ambivalent about this.

I do like Yahoo for news and data aggregation. I would say that this experience is better on the financial front -- Yahoo Finance is still one of the best financial news aggregators out there -- but weaker in areas where vertical brands are competing more heavily, such as the Sports front (I now spend more time on ESPN.com for sports information).

But even in the place where I spend time -- Yahoo Finance -- the experience has largely remained the same for the last five years. In fact, I would argue it has gotten worse. Two major changes: adding threaded message boards and changing the stock chart format have been disasters, in my mind, and have decreased my usage.

Likewise, I use Yahoo Groups a lot, and it appears to be the same application it was five years ago. It's very kludgy, and "Web 0.2." The only reason I don't switch is because there is a lot of inertia to mailing list groups. But I'm almost certain there must be better products out there.

Can you imagine if Microsoft had gone five years without a major overhaul of Word, Excel, or Powerpoint? it would have gone out of business.

The Fix: Move to a product marketing strategy. Identify key applications and which products are essential to your audience, and put strong managers in charge of them. Give them major overhauls. Consider buying some strong Internet media brands, and making them part of your core product strategy. Talk about it to the market.

Conclusion. That's it. After writing this, I feel like I know know exactly what's ailing Yahoo. Beyond issues of corporate governance, accountability, and basic financial responsibility, which I've already written about, I think the bulk of Yahoo's problems center around its core marketing strategy. It really needs to overhaul how it defines its core products, and how it talks to the market about them.