Can You Sell Me Now – Yahoo and Display
Not too long ago, we talked about an experience that almost everyone has gone through at some point in time – being a part of what can only be described as a sinking ship. The overly dramatic analogy that came to mind at the time was the Titanic. Working at a struggling company feels like being on board a doomed ship. You watch it continue to do down with little ability to make it better. Even the best case scenario is just saving yourself and trying to minimize the brain damage, looking for that right point where you jump, not so high that you hurt yourself but not too low that you end up pulled under.
There is a difference though between a dip and destruction. Almost every major company faces set backs. In our offer driven ecosystem, our businesses resemble movie studios more than anything else, continuously looking for that next hit to propel the business forward. If they are really lucky, they grab hold of a Harry Potter and have years of future hits, or in today’s mobile world an Angry Birds that can iterate and expand to new platforms. Every hits driven company faces down times, with ours being no exception. It’s a different cycle, though, when the company is AOL or MySpace. They dominated their respective fields yet have faded into relative obscurity. For an executive charged with a turnaround, it’s almost a no-lose proposition. If you win, you really win. If you lose, there are a host of built in reasons why it couldn’t have worked. Sucking less is almost a victory. It is in this light that makes Yahoo an interesting study.
Only a small percentage of people reading will remember Yahoo in its earliest iterations, a simple directory, not a search engine, but a discovery engine. It was like a phone book, with a bunch of links in categories. But, that was more than anyone else had, and it was enough to create not just a business but to capture millions upon millions of web users who, like AOL before it, relied on the site as the place to begin their web experience. It’s a great place to be, but it’s a fickle spot. Yahoo did a great job of embracing search and buying GoTo.com, but like so many who have a commanding lead of a hot market, they presume that their share will only continue. That is how I would describe MySpace; at 50mm users it seemed incomprehensibly large. With Facebook approaching 1 trillion members, we see how great but not resting on one’s laurels worthy it is.
Calling Yahoo a shadow of its former self doesn’t seem fully fair. It’s a shadow in terms of its former self in terms of buzz, brand, and excitement. It’s a shadow of its former self in terms of moral and organization. But, it still has problems that need solving, improvements that need creating, and quasi-stability, even if it has been languishing. It has all of this, including the languishing, because it makes real money – $1bn+ per quarter. It just hasn’t grown that number. Their quarterly revenues have actually shrunk over the past three years since its latest CEO took over. Asked why they missed their most recent numbers, she blamed the impact of changes in their sales leadership.
Digiday profiled “Yahoo’s ad sales mess,” hearing from media buyers who said the company has “failed” and “essentially disappeared when it comes to staffing, attentiveness and the simple ability to handle significant dollar volume.” The article quotes one buyer as saying, “They are not present,” and “If I had to get something big done, I literally wouldn’t know who to call right now.” Another says, “Yahoo has dropped off the map regarding senior attention as far as I can see. They still do a lot with the teams and maintain strong relationships with certain accounts, but I have asked multiple times to have a holding company-dedicated manager from their side to develop long-term strategic partnerships and I have gotten nothing from them.” It’s probably over the top to say how the mighty have fallen, but Yahoo was the “gold standard” for media properties and their ability to generate ad sales dollars from brands.
It is probable that Yahoo has struggled because of management, but it’s more fun to think that what we see today is the result of not understanding the market…again. Display has changed, and it continues to change almost daily. Who is leading that innovation? Who has made acquisitions that show they understand not only where display is going but are willing to make some necessary bets? Unfortunately for Yahoo, it’s Google…again. Display is a mess. It makes search look easy. Audience targeting at scale is part technology, part smoke and mirrors, but no part simple. Yahoo’s exchange is largely irrelevant, and chances are their most talented engineers don’t get to work on the next generation, but rather patching the old generation. Sales always suffers when the product suffers. Yahoo has a product in terms of attracting a valuable audience, but they don’t have a product for proper monetization. It’s no wonder sales has issues. You need to believe in leadership and believe in the company’s ability to have something good to sell. Like tech talent, the best sales talent will leave as well when it just becomes too much of a grind to sell.
