Yahoo is a master of portals, but they have let their search product suffer. They have long built out their offering in such a way to add value to their users through functionality while they hoped that revenue would be made in the process. There was no clear attempt to either target those users with advertising or extend any real value added services. Search is a product of users making their way through the Internet, rather than the core of their business. Yahoo sees their core business as being Yahoo News, Finance and Mail. They have made acquisitions such as MyBlogLog and Flickr to extend functionality and to increase revenue. And whilst the brand Yahoo! Is well known, this statement by Philip Kotler shows that it is not about the reliance on just the brand but also that the organisation is targeting all of their consumers;
‘An important aspect of B2B branding is that brands do not just reach your customers but all stakeholders – investors, employees, partners, suppliers, competitors, regulators, or members of your local community. Through a well-managed brand, a company receives greater coverage and profile within the broker community’
Philip Kotler (2006)
The all inclusive Yahoo is counting on the traffic to be monetised through private advertising deals and partnerships. Their business is based around other organisations paying to have their service included in the Yahoo Directory in one form or another, thus making it a B2B transaction. Private advertising is such that a company may put their banner in a prominent location of the Yahoo network. For example, play.com, a well known online retailer, might put a banner ad on the Yahoo home page for £50,000 a month. This banner ad is then targeted to each and every user who enters the Yahoo home page.
The Yahoo! 10 K report (2007) states, Yahoo promote their marketing services in a highly competitive and rapidly changing global Internet market. The Yahoo! brand is a highly recognized service on the Internet both in marketing and search services. The marketing strategy to retain customer loyalty and to continue to build brand recognition is to provide top quality customized marketing services through three primary channels of communication: direct, online, and telemarketing. The direct sales team’s focal point is selling Yahoo!’s marketing services and solutions to large advertisers. Online sales are directed toward self-service programs which enable advertisers to tailor their websites to specific target markets by attaching links to the websites which directs customers to advertisers’ products. Telemarketing’s focal point is providing marketing services to medium and small advertisers. Yahoo!’s fundamental marketing approach is the continuance of product development and properly managing each market segment to ensure the Internet user is experiencing the best services Yahoo! can offer. Yahoo! ascertains their marketing sector is involved in each step of product development, management to understand our services, and the best method to convey the services to the advertisers and the Internet user. Yahoo!’s marketing program utilizes all forms of media to convey their products to the geographical audiences of existing and potential users.
One interesting marketing tool that Yahoo uses on their website is the “Yahoo! ?Buzz Index.” The Buzz Index gives a daily update of what’s hot and what’s not. This data is gathered by data drawn by what people have been searching for that day. This allows not only the internet user see what’s hot, but from a marketing point of view, allows us to see what changes can be made to advertise particular products. Therefore the advertisers are able to make critical marketing amendments to adapt quickly to the changes taking place in their particular market share. By informing advertisers to the website visiting habits of their customers, Yahoo! continues to market their services to the Internet users. Yahoo! Are very clever in the way that they learn about the world and what their users are looking for. Yahoo! requires their users to register for their search services. This allows Yahoo to track movements made by the user (adhering to privacy laws wherein). By doing this the user in the registration process gives their “demographic DNA” away to the information data bank. Allowing, Yahoo! to aid the advertisers with additional data and get information such as target audiences for their products and the success of current adverts.
In any organisation it is essential that all business areas are analysed to ensure that the business is running at its optimum and that any problems can be spotted and resolved before they affect the success of the organisation. This can be done easily by using the swot analysis tool. I have created the matrix which consists of the strengths, weaknesses opportunities and threats which will help when making recommendations of how Yahoo! Inc can progress into the future.
STRENGTHS:
- Yahoo! Inc. has many more auxiliary products compared to the competition. (i.e. Yahoo...Answers, Cars, Chat, Dating, Finance, Flikr, Games, Groups, Horoscopes, Mobile, Movies, Music, News, Property, Shopping, Sport, TV, Travel, Video)
- Yahoo! Inc. has strong brand recognition
- Access is available to anyone with internet access.
- Partnerships with VISA and NFL.
WEAKNESSES:
-
Yahoo! Video doesn’t even appear in the top 10 most viewed video sites. The list shows YouTube obviously dominating the top spot, but the Yahoo! Rival Google being a respectable 5th. (See fig 1. In appendix)
- Yahoo! search has not increased its share of the search market over the period of two years whilst Google has increased by 9% (see fig 2. In appendix)
- Google search results generate twice as much revenue as Yahoo! (see fig 3. In appendix)
- Advertising revenues are falling due to Google and other competitors in the market.
OPPORTUNITIES:
- Internet video advertising is becoming more and more popular and widely used with the ever expanding YouTube phenomenon.
- Yahoo! Inc has purchased Flickr which is fast becoming the new way to post images quickly and efficiently online in a blog fashion.
- With the internet becoming cheaper and cheaper, broadband prices falling and availability increasing and mobile internet taking off, there are more and more people ‘going online’
- Yahoo! has a strong and talented employee base.
THREATS:
- Google commands about 50% of all online searches and Yahoo! has only 24% according to Neilson/NetRating. (see article 1. in appendix)
- Consumer attitudes towards online advertising may become more negative if it gets to a stage where it imposes on the ease of use or credibility of the site.
- Increasing strength of competitors.
- Social websites such as MySpace and Facebook are now breaking into the online advertising market. Facebook have an especially functional advertising system. Facebook will recognise what music you like by what information you have entered on your profile and use this as a basis to advertise similar music, movies, products etc.
- Google is surpassing Yahoo! in revenues. (As shown in fig 3. In appendix)
Recommendations
- Use Flickr as a new means of advertising. Now that the business has been acquired it is a good idea to use it to its full potential. It is a growing interest along with Facebook and Twitter, so use this to its highest advantage.
- Use Yahoo!’s current expanded to market to target advertisers in these countries, as mentioned before there are many different countries that Yahoo specifically operates in.
- Use internet video advertising boom to strengthen Yahoo! video sites, YouTube is obviously the market leader but maybe Yahoo could enter a market which YouTube haven’t yet realised. For example the live video market, whereby it could be possible to show live screenings of concerts or football matches and along with this would come big sponsors and major money in advertising deals which are always associated with concerts and sports matches.
- Increase Flickr’s capabilities in order to reverse the decline in image search on Yahoo! And to rival Google. Google image is very easy to use but it is very simple looking and maybe not working to its highest capability. However Flickr is much more functional and could be linked in a better way to Yahoo to rival Google image.
- Use Yahoo! brand recognition to build a social website through Yahoo! Inc. With sites like Facebook, MySpace and Bebo all specialising in this area this could be hard. But with a well recognised brand like Yahoo! It could be possible. Especially if the social network was aimed slightly askew of what is already on offer. For example Bebo is primarily used by teenagers and high school students, MySpace age ranges from teenagers through to college students and above. Whilst Facebook is used mainly by university students. So maybe Yahoo could tap into the social networking phenomenon by targeting primarily adults.
After developing the SWOT matrix it seems to be in the company’s best interest to pursue a strategy that focuses on increasing their advertising revenues. Yahoo!’s most predominant strength is their brand recognition. In developing a strategy for Yahoo!, the company should use their strong brand recognition to entice more advertisers for their site. They also must concentrate their efforts on upgrading and advancing their target advertising capabilities
I believe that the company needs to come to the realization that search is their future, with advertising intertwined such as in banner ad integration. The first step is refining their search function and maybe then more companies will be willing to advertise with them. In today’s ever reliance on social networking such as Facebook, Yahoo could use this as leverage and integrate them within the Yahoo brand or site. This is something that their main competitor Google has failed to capitalise on. Yahoo need to be smarter when it comes to their search functionality. As Google has figured, it is possible to deliver smarter advertising by linking text, or words which transport you to another site to the actual advertisements being shown on the page. For example, if a user is reading an article about spot removal, then Yahoo would be able to distinguish what the user is looking for and show the advertisement most relevant from their pool of organisations who have paid for their company to be featured. Then, if a user clicked on the link, they would instantaneously be served an ad for that spot removal. By Yahoo focusing on improving its search, they will be directly addressing their diminishing user base. People are leaving because the search results aren’t as relevant as Google’s. And with less hits, there is evidently less demand for organisations wanting to advertise on Yahoo. Advertisers aren’t advertising with Yahoo because their implementation is faulty; their search engine is flawed. If they clean up the search results then the problem may disappear. To conclude, Yahoo needs to deliver a more value added product which will see its B2B transactions increase and maybe even see it rival the giant that is Google.
References
Books
P. Kotler (2006) ‘B2B Brand Management’
Reports
Yahoo! 10K Annual Report February 23, 2007 retrieved from
Articles
Online video traffic up 178% in a year retrieved January 10, 2009 from
The History of Yahoo-How it All Started. Retrieved January 07, 2009, from Yahoo! Media Relations: Http://yhoo.client.shareholder.com/press/history.cfm
Yahoo Stocks and Shares retrieved January 14, 2009 from