Yahoo has been an interesting company to follow as of late. Late last year, I wrote that I was sick of the “who was going to buy Yahoo” stories in the popular business press and instead advocated that Yahoo save itself (for full post, click here for “Yahoo Should buy Twitter and than merge with AOL”).
That said, current CEO Scott Thompson has only been on the job for about three months now, yet, we believe he’s finally charting Yahoo on a path towards some specific strategy; something former CEOs Carol Bartz or co-founder Jerry Yang never did. Although some elements of the new direction have been trickling out in the press, we should see the entire plan sometime next week when Yahoo reports its Q1 earnings.
Here what we know (click here): Thompson is cutting about 2,000 employees or about 14% of Yahoo’s workforce. Beyond the balance sheet boost this will eventually create, the main purpose of this overhaul is to streamline the massive sprawl of Yahoo’s portal. Most important, Thompson has finally directly answer the question that I, as well as, so many other strategists have asked over the last 5 to 8 years: What is Yahoo? In Thompson’s view, it’s a media company and he wrote in a memo to Yahoo employees: “Our online media presence has long been our company’s clearest competitive advantage.”
What I also found interesting was Yahoo’s massive user base. Yahoo’s network of sites is the third largest in the U.S., trailing only Google and Microsoft according to the latest data from traffic tracker ComScore. In February 2012, Yahoo’s network had 174 million unique visitors, even more than Facebook’s 159 million. WOW!
Now that Yahoo is only a clearly defined path as a media company, Yahoo and it’s new CEO must avoid the mistake of previous CEOs who guided Yahoo on a path to nowhere. Once the Internet’s first and largest Web portal, 17-year-old Yahoo has lost its edge in nearly every area to newer, nimbler rivals.
Thompson must get ahead of in some key areas before major competitors also claim those market places. Two easy developing areas are mobile advertising and social browsing services like GetGlue or Miso. The mobile advertising space has been hot in the last six to nine months with Google, Apple and other gobbling up the main players although a few smaller firms still remain and could be had at a good price. Perhaps more promising are the social browsing sites such as GetGlue and Miso which allow users to actively participate in their favorite TV shows, movies and other verticals such as books, restaurants, stocks, etc. We know Facebook just dropped $1 billion on Instgram. For $1 billion, Yahoo could buy 2 or 3 hot mobile commerce firms that could not only complement their new media content strategy but also chart Yahoo towards strong future growth.
Something to think about today…
Associate Professor of Marketing
Stillman School of Business
Seton Hall University