Ad Age Advises Yahoo: Startling Strategic Counsel

January 19, 2009

I read this weekend that top job opening require technical or scientific training. Imagine my surprise when Ad Age, a dead tree publication for the Liberal Arts and Master of Fine Arts crowd, published “Four Ways Yahoo Can right Itself under New CEO Bartz.” You can read this remarkable article here. Keep in mind that Yahoo is a technology company. The products and services of Yahoo are based on software, systems, and other arcana that delight computer scientists and electrical engineers, leaving the art gallery and soft drink executives lost in a cloud of unknowing. Furthermore, if you have read my other commentaries about Yahoo, you know that the ills of Yahoo are a manifestation of a misalignment of technology and user needs. Fixing Yahoo, therefore, requires more than a public relations blitz and a handful of consultants to change the ad rate price schedule. Some of the Mad Ave ilk will point to the unsold Super Bowl TV spots and assert, “Yahoo needs to snap up these ad slots and make some brand impact.” Right, advertising online services on the Super Bowl will work just as it will for’s sponsorship of NASCAR.

Abbey Klaasen, the Ad Age journalist, identifies four strategies for the Yahooligans.

First, Yahoo has to hang on to search. I am a bit fuzzy about what “search” is referenced. Yahoo has a cartload of search systems. My hunch is that Ad Age thinks about Web search and ignoring the Flickr and Delicious systems, which may have more sizzle than the so so Web search. There’s also mail search, the search on the personal section, and so on. Ad Age is aware of the sports and finance information, but I wonder how much analysis is going on at Ad Age. Anyway, the idea is keep “search”. Let’s assume that Yahoo is to keep its various forms of search.

Second, the recommendation is for Yahoo to “combine search and display data.” I have to admit that I am not sure what this means. Yahoo lacks a homogeneous system; therefore, combining any cluster of services means normalization, transformation, and manipulation of data. Yahoo had a project underway to rationalize some disparate data, but I am not sure if that is still underway or if it swam on rocks. Advertisers have been asking for access to specific slices of Yahoo demographics across services for a while. Yahoo can’t deliver these types of audiences because of technical issues. Yahoo is a technology company. If a service is not available, there’s a technical reason, not a managerial reason. If the cost of “fixing up” the system is too high, the service will not be available. Yahoo has not been able to focus its resources on certain technical problems because it has a GM problem; that is, GM knows what Toyota and Honda do to make autos. GM can’t change the culture nor can it amass the resources to implement the Toyota and Honda solutions. Yahoo’s engineers are smart. Some go to Google and become happy campers; for example, the founder. It’s not brains; it’s a fundamental technical problem exacerbated by cost and management.

Third, Ad Age wants Yahoo to sell “the Unilevers of the world”. My hunch is that this is a play that will require fixing search and audience data. It is going to be tough to repaid the Yahoo-mobile unless one has the right parts. Yahoo is going to require the equivalent of a resto-mod rebuild on the jalopy before the Unilevers pump more cash into the Yahoo advertising opportunity.

Fourth, buy Hulu. Yahoo has been fooling around with video for a while. In case anyone missed the news, Google has managed to make the number two search engine. is also way behind the Googlers in terms of traffic. I grant that is better than Yahoo’s video services. Follow me on this line of reasoning: If Yahoo’s previous attempts to do video have been less than stellar, why will Yahoo handle better. Does anyone remember Finance Vision or the original content production push with Lloyd Braun’s return here? So, I assert that Yahoo’s ability to integrate an acquisition is questionable. Yahoo took years to integrate the Yahoo photo site into Flickr. Let’s assume that Yahoo does buy Hulu. Can Yahoo contribute to the service? At this time, whatever management expertise Yahoo has will be stretched trying to deal with the existing Yahoo technology and financial problems.

In short, I find the Ad Age counsel pretty interesting. It’s not wrong as Mad Ave thinking goes; it’s just from another dimension. I will stick with the reality of the goose pond in Harrod’s Creek, Kentucky.

Stephen Arnold, January 19, 2009


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