Old strategy documents should be old news. Yahoo’s not talking much, but it would be wise to steal a page from Time Inc.
Yahoo is telling people it’s not going to sell off its Right Media online advertising exchange. The Journal also says its core ad hosting and targeting technology – its APT platform – will also remain intact, though I don’t see any direct references to it in other interviews. Ad Age hears that Yahoo will invest several hundred million in ad technology, even though its exchange is mostly filled with its own remnant inventory, rather than that of many other online publishers. The six key positioning factors that Yahoo says will differentiate Right Media aren’t earth-shattering, but they’re sensible. Yahoo should indeed invest in advertising technology for its own purposes; I’m less sanguine about its chances in building out a marketplace. Possibly Yahoo could combine on some more programs with Microsoft. AOL is also trying to execute on a content plus ad network strategy, with a stronger network but weaker content.
Yahoo revealed in a filing that it might reevaluate its plan to return to shareholders the $4 billion it’s collecting from selling off its stake in Alibaba. Yahoo already has $2 billion in cash, and count me among the observers who think Yahoo would be better off spending on acquisitions than on a stock buyback or a dividend. Others think Yahoo might invest in search and in engineering in general. Plans to unload its ad technology seem to be off, so maybe Yahoo is looking at AOL and observing that the only growing part of AOL is its ad network business. I’m still a proponent of Yahoo buying up some “traditional” web media properties and investing in targeting, so that it can take a shot at leading online brand advertising. Of AllThingsD’s list of suggestions, Pinterest, Yelp, and Foodspotting would fit best.
When AOL reported its quarterly earnings, it showed that overall online advertising was up 6 percent, but that was driven primarily by Europe and AOL’s ad networks. Its own display ad business was flat, and it blamed a continuing sales force reorganization. It claimed its hyperlocal Patch business will hit $40-50 million this year. Earlier, Yahoo said its display ad business was up 1 percent. Microsoft said its online advertising business was up 8 percent due to search, while display was down slightly. Together, the big portals’ display ad revenues are either flat or down. Google is probably up, but it doesn’t break out display from search, and we’re all waiting for Facebook to report tomorrow. If it turns out that Google and Facebook are the only big guys up double digits, that presents a pretty gloomy picture of online brand advertising. Both companies mostly sell direct-marketing ads that qualify as remnant inventory for brand-name publishers. Would putting together some of these weak sisters help accelerate the business?
Microsoft’s struggles to make a successful business out of advertising led to the company posting its first-ever quarterly loss. Some have been saying for years Microsoft should never have gotten into media. Is it about to get out?
Yahoo’s new board is throwing big dice with Marissa Mayer. Predictably, Silicon Valley – and cult of personality fans – like the move, while Eastern media watchers are dubious. I’ll prove my bicoastal nature by saying I think Yahoo’s best chance is to aim for modest success with a media-centric strategy. But Mayer is a better option than Ross Levinsohn if Yahoo wants to swing for the fences and use its still-popular media properties to do some damage in, for instance, mobile apps. Potential startup acquisitions are likely to fare better and be more eager to join a Mayer-helmed Yahoo. The “vision thing” is a canard. Yahoo is clearly a collection of big online media brands and email, and is still the startpage for a lot of consumers. Search is done, though maybe there’s some negotiations wiggle-room. Yahoo could still own online brand advertising; Facebook certainly hasn’t shown much. Mobile ads will be a long-term payoff for anyone not in search, but coupons, loyalty programs, and mobile branding are up for grabs. Mayer’s last job at Google was local, but if she’s so valuable, why isn’t Google replacing her?
But will they make ad sales together? AllThingsD says the two have settled their patent disputes without money changing hands, but rather that there’s some kind of joint ad sales effort in the works, along with something about integrating Facebook Likes data into a new Yahoo ad format. I’ll believe that when I see it. It’s easy to imagine them opening up inventory for big, cross-platform campaigns. And frankly, Facebook could use a lot of help selling that sort of thing. But just because they do a little contact integration, I wouldn’t be quick to assume that Facebook’s potentially valuable Likes-based ad network – you know, the one Facebook denies it’s building – would open up via Yahoo. Though doing a big ad deal with Facebook might remove the “interim” from Ross Levinsohn’s Yahoo CEO title. I was waiting to post this in hopes for an official announcement, so stay tuned.
Ross Levinsohn – a real media guy who probably should have got the job post-Bartz – will be the big portal’s interim CEO after former PayPal exec Scott Thompson fell victim to a resume-padding scandal. Yahoo is bringing on gadfly investor Daniel Loeb to its board, along with two of his hand-picked nominees. Fortunately, one of them is not Jeff Zucker, although former Booz-Allen media fan Michael J. Wolf is on board. Om wants to see a vision. I think Yahoo can thrive if it just gets its core online media business back in gear. It will never be a tech powerhouse, nor should it try. It couldn’t even translate Hadoop into an ad- and content-targeting advantage. While at Fox, Levinsohn engineered a deal with Google that made MySpace fat and lazy, so much so that it let Facebook happen. But that’s easy hindsight, and presumably lessons learned.
Yahoo didn’t offer much clarity on new strategies during its earnings call. It will cut some 50 properties – no indications of what – it hasn’t decided whether to sell off its ad networks or technologies, it’s reopening negotiations on its Asian holdings, and it’s got vague ideas on e-commerce. Yahoo should use any money it gets from asset sales to buy up premium content sites so it can better serve brand advertisers. Dividends won’t get the company back in growth mode. Its most important business, display advertising, continued to shrink (down 4 percent to $454 million), even if total revenue were up 1 percent to $1.1 billion. My paidContent colleague Staci Kramer runs down the highlights.
My paidContent colleague Staci Kramer calls Yahoo’s re-org “blurry.” That about sums it up. The news is a new e-commerce group that many think will be headed by CEO Scott Thompson’s former PayPal colleague, Sam Shrauger, who just left PayPal. Commerce seems to be on equal footing with media and with Yahoo’s communications apps. Ad sales is another big group, but Yahoo’s ad networks live off in a technology group, which makes observers think they’re for sale. My recommendations for Yahoo were to double down on content and brand advertising, and forget about trying to be a tech platform or an ad network. The fuzzy notion for e-commerce seems to be to try to close the loop between awareness and demand creation and actual purchases, but Yahoo’s not saying how. Nor how it’s going to get better at applying all the data it’s already collecting to make its marketing and commerce services more effective.