An Alternate Yahoo Strategy: Cut Search, Not People (YHOO, GOOG)
A Silicon Valley exec who knows Yahoo well takes issue with our endorsement of Yahoo's coming cuts. It's not that cuts themselves are bad, the exec argues. But they ought to be focused in one particular area -- YHOO's paid search business. The argument -- Yahoo has some real strength, namely a huge brand and audience, but any additional efforts to make up ground with Google in paid search are bound to fail. Best to bail out now, and refocus.
Earlier: Yahoo: More Details On Potential Mass Firings
Think you are way too positive- they are bleeding good people and search share. They will cut these people and things will continue to head down. Until they give up on search ads, stock is going to continually head down. Layoffs will hurt more than help until they stop doing things that aren't working. Doing more with less is a losing strategy they have been on for years. This is more of the same.The "bail on search" argument isn't new -- we've been hearing it since 2006. Our question to our readers: Do you think it could work? And do you think Jerry Yang would ever consider it? Sound off in comments below.
Earlier: Yahoo: More Details On Potential Mass Firings
1. Advertising
Advertisers more and more want to be able to manage a full campaign that includes search and display dollars. If you cannot offer your own search solution, display money may be reduced as well. See AOL for a recent example. Could Yahoo! cut a similar deal to AOL in which they get their own white-labeled Google Marketplace to sell to a specific list of advertisers? Possibly. But, then Google would control the platform that Yahoo! was using to service its key advertisers. How long would it be before the "whitelabeled" solution lacked features available in Google's branded solution?
2. Publishing
The growing theory behind web publishing these days is that content should be "atomized" and then mashed together around a topic. E.g., for your post here on Yahoo! and paid search, the theory is that all the related content should draw from Yahoo's store of content and only the most relevant / highly monetizing content that is contextually relevant should be displayed. While the theory sounds far-fetched, practical attempts at this include Y!'s Brand Universe. As the number of uniques visiting Yahoo (and the other portals) stops growing, Yahoo will need to ramp up engagement and/or maximize revenue per page to continue revenue growth. Surfacing the best content and the most valuable content will be key to success - and the underpinnings of great search technology happens to line right up with the idea of creating content rich pages on the fly.
So, if you get out of paid search, the question is what are you doing to the rest of your business down the road?
1) Form a joint venture with Microsoft to create a viable alternative to Google AdWords. Call it Overture. ;-)
2) Implement paid search as 3 different options: search ads, contextual ads, parked domain ads.
Providing advertisers the option to buy only search ads on Yahoo, they could actually grow their customer base. Part of their problem is syndication fraud (aka distribution fraud). When advertisers buy PPC ads via Yahoo, they don't really know what they're buying. If they had better control over the distribution of the ads, Yahoo might have an advantage over Google.
At the same time, parked domains are a growth area. Rather than hide this traffic w/in the existing search/contextual system, separate it. Create an open marketplace. Brand it. Just as you see "Ads by Google" plastered all over the web (contextual ads via AdSense), you'd see "Domain Ads by Yahoo" or something like that all over parked domains.
i've heard that argument before. but unless the "industry" is going to somehow compensate yahoo for its failing paid search effort, hard to see how it makes sense for them. meanwhile i don't see msft bailing out anytime soon.