By now you've seen the news that Yahoo's Jerry Yang will be stepping down once a replacement has been named. I met Yang years ago at one of Yahoo's earliest sales conference where I was invited to be on a customer panel. I still have a Yang autographed picture of one of my more famous online ad campaigns, Harrisdirect's Elsie Lee. You obviously can read the two links I put above for good analysis of what Yang's departure means, but here's my view from a former Yahoo fan....
- Yahoo has lost its position in the online advertising world. It was taken by the low end from Google's self servicing model via Google's content network. Google provides targeting, reporting, multiple sites all via credit card and self-directed by the advertiser.
- Yahoo's position as the premier advertising site has been splintered off by the fracturing of the internet. It used to be you had to advertise on Yahoo, but now you can pick up Yahoo's customers across other sites due to the multitudes of sites and the linking of content.
- Yahoo tried to create an environment where all your internet tools were located in one place. Finance, search, pictures, videos, content, mail, and etc - almost like they were trying to mimic telecom's bundling strategy. Unfortunately, the internet puts products one click away and if your tools aren't as good as what's out there people move on to the next product. There are no barriers to try other internet products.
- Yahoo long ago gave up their dominance in the search world to Google. I've written many times about this. However, I don't know who searches on Yahoo anymore and they certainly are not a "must use" as long as Google takes your paid ads. Typically MSN delivers the best ROI but low volume, Google is a monster, and Yahoo is somewhere in the middle. I ran a fraction of Senator McCain's ads in Yahoo after the convention and nowhere near as much on Yahoo for the RNC.
- Yahoo's credit/finance department is impossible to deal with especially for search. Even though I've run millions in search dollars through my own digital company and have credit with MSN and Google, Yahoo insists on offering my company credit only after I prepay them for 3 months and they hold my money while I pay the monthly bills. After the campaign they then will apply the deposit to future accounts - THAT MEANS THAT I HAVE TO HAVE 3 TIMES THE AVAILABLE BUDGET AND I HAVE A DIFFICULT TIME GETTING MY MONEY BACK. I use a business American Express Card which has unlimited charging capabilities so that it COSTS YAHOO merchant fees and I earn interest and Amex points on the charges.
- Their competitive advantage was their targeting and ability to build behavioral targets but based on my recent experiences I'm starting to doubt how up to date that is anymore.
All is not lost with Yahoo because they still have tons of volume and critical properties like video and finance. They need to revamp their sales strategy and team which has been decimated. They need to give reasons for people to say they are a Yahoo user. They need to be more aggressive with their sales and provide more self-servicing support.
Google's model actually downplays the cost you pay (CPC or CPM) and puts the responsibility on the advertiser to create great ads. Google's model shows that if you are highly relevant and get great CTRs you can pay pennies on the dollar. Yahoo's business is really display ads - they need to worry less about CPMs and more about revenue, profitability. Why can't Yahoo put together similar pricing models for display ads?