What Has Gone Wrong with Yahoo?

I must say that I have a soft corner for Yahoo.  For two reasons – I used (and still do) a number of its services when I started using the internet regularly and because, as an Indian, I have a certain fondness for the brand name.

Today, Yahoo offers a number of services – it has a web portal, a search engine – Yahoo Search, Yahoo Directory, Yahoo Mail, Yahoo News, Yahoo Finance, Yahoo Groups, Yahoo Answers, advertising, e-commerce, online mapping, video sharing, fantasy sports and its social media website.  Over the years, it has acquired a number of other companies/brands including Tumblr and Flickr. It also acquired a significant stake in Alibaba. Around 700 million people visit Yahoo websites every month.

Yet, Yahoo is in trouble.  Its revenues have remained stagnant for a number of years and its stock price, which had reached a peak of around USD 119 in 2000 is down to around USD 50 (the stock price had tanked to around USD 8 in 2001, post the dotcom bubble burst.) Since 2009, Yahoo has seen five CEOs, the last being Marissa Meyers (erstwhile of Google and Walmart) who took over in the middle of 2012.

Many reasons have been offered for Yahoo’s problems – the loss of its innovation mojo, internal squabbles, wrong hiring of programmers, weak culture and a bloated middle management, amongst others.

I think the main problem with Yahoo is in its marketing strategy.  While Yahoo has very high name recognition and a high number of visitors, its brand identity is just too nebulous.  Yahoo is into so many businesses that it just doesn’t stand for anything concrete in the minds’ of consumers. Google is still seen as the best search engine, Amazon as the best online store and Facebook and Twitter as great social media platforms. Yahoo is into everything and I can bet that no one can really say what it stands for. Long ago, Al Ries and Jack Trout had said that a brand must own a distinctive word – I don’t think Yahoo owns one.

Yahoo has some great products and one way towards revival would be to create different brands with very clear positioning. An all-encompassing Yahoo brand name is dragging even good products like Fantasy Sports and Yahoo Finance. Most of Yahoo’s revenues come from advertising and Yahoo should also decide, once and for all, whether it is going to operate as a media company or as a technology company.

Yahoo ran an ambitious advertising campaign with the tagline – It’s You in 2009.  Frankly, it seems like a meaningless slogan to me; it just doesn’t communicate clearly what Yahoo is and what it stands for.

When Marissa Mayer’s took over the reins at Yahoo, many analysts felt that she would turn things around at the ailing Brobdingnagian.  Two and a half years have passed and the elusive turnaround has still not happened. Maye is still working on a breakthrough product to reverse the fortunes of her company and feels the need for more time. The attached article from New York Times by Nicholas Carlson too argues that Yahoo will not be able to survive until it comes out with a new, stunning winner. You can read the article here.

Of course, Yahoo should work towards a breakthrough product. Yet, I think the problem is more of a marketing one.


Visual courtesy : https://www.flickr.com/photos/32716504@N03/

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This article was written by andy

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