Yahoo is among the most iconic companies to come out of the internet’s first generation which started off in the mid-90s when the Internet was picking up. Its founders came up with it as a way of guiding users through the Internet. The company had massive first mover advantage and Internet companies were a relatively new thing. However, its revenues slowed down with the burst of the dot.com bubble and poor management stifled innovation within the company, making it lag behind its peers.
Marissa Mayer, a former engineer at Google, came on board Yahoo as its CEO in July 2012 after a period of instability at the helm of Yahoo’s management, her being the third CEO in a space of a year. She joined Yahoo when the company was struggling in the face of increased competition from search rivals including Google and the emergence of social giants such as Facebook. It was also against a backdrop of dwindling online advertisement sales, source of revenue that Yahoo had heavily relied on since its inception.
As the Chief Executive Officer, she targeted four specific areas of growth: mobile, video, native advertising and social. She even came with a pseudo-acronym for the goals-MaVeNs.
1. Going Mobile
Increasing usage of mobile phones and the emergence of smartphones that can access the internet and have applications installed in them have changed the way modern companies operate. Mobile phones offer an advantage over the desktop computers in that they are portable and can be carried easily from place to place. When Marissa joined Yahoo, she found the company still stuck in the desktop era which was long losing its relevance to mobile. Yahoo’s revenues from desktop display advertising had dwindled and Marissa made it her mission to move Yahoo’s business away from its declining desktop display advertising and towards growing areas like mobile.
Yahoo’s management also decided to take advantage of mobile applications which have given those companies that adopt them a competitive advantage over their peers. Companies can now connect and interact with their customers through applications downloaded on the phone. Yahoo therefore decided to go mobile and its users can now access offerings such as the Yahoo app, Yahoo Mail, Yahoo Weather, Yahoo News Digest, and Flickr on mobile device. The company’s mobile team was ramped up from a personnel of 50 to 500. It also introduced a new mobile developer suite of services designed to help developers measure, advertise, monetize and enhance their mobile apps. There’s also an offering that enables developers to integrate Yahoo Search directly into their apps, so users can search the Web within an app.
Mayer encouraged developers to take advantage of the app technologies, including its mobile management and analytics tool Flurry, which Yahoo purchased for more than $200 million. Flurry’s latest enhancements make it easy for developers to gain complex insights into their apps’ performance beyond user demographics, device, or time spent. The thinking behind this was that better apps—with analytics and insights driving improvement, instead of just guessing what’s working—will lead to more traffic and ultimately more ad revenue. Yahoo wanted to play a role in generating that revenue too, through its mobile advertising programs.
Developments in technology have changed the way companies market their products, brand and even make advertisements. More and more techniques and moving towards video than text format and Yahoo sought to develop this area too and the investment in video have gone a long way to attract advertisers.
3. Native advertising
Native advertising is a type of online advertising that matches the form and function of the platform on which it appears. The marketing messages that mimic the format of the content they appear with. They seamlessly blend in and do not disrupt from the user experience. It is a mode of monetization that aims to augment user experience by providing value through relevant content delivered in-stream.
Yahoo’s native advertisements are a big leap forward from traditional mobile advertisements, which are often tiny and unattractive. They also represent a shift from the past when While Yahoo filled its web pages with lots of advertisements.
4. Data analysis
Data is increasingly becoming an important asset in the commercial world especially n this era of the Internet of Things. Many companies are investing resources in data analytics in order to make well-informed decisions rather than relying on past results or gut instincts. Yahoo’s management decided to incorporate data analysis as part of its decision-making process, including decisions regarding advertising. This will go a long way in helping the management make effective decisions that will maximize the company’s revenues.
In 2013, Yahoo acquired Tumblr, a micro blogging service popular with teenagers, in an effort to make up for missing out on the changes of social media and failing to buy Facebook in 2006. However, Tumblr’s performance is much lower as compared to other social media platforms such as Facebook and Twitter.
Yahoo is also seeking to expand its search business through deals like the one with Mozilla, where Mozilla is to use Yahoo search as the default for its Firefox browser. However, the company’s first-quarter results fell short of expectations, as higher revenue from search ads was wiped out by the cost of paying partners like Mozilla.
The development could be too little too late as is seen with their media attempt of the show “community”. They are trying to make things that are old news come back. The show failed as it was already an exhausted show. This is symbolic of previous and maybe even current management’s folly. The management may need to focus their goals towards ways to enter new markets or create new niches for themselves or risk being trampled on by the other companies that are charging full speed ahead. They need to stop working with old policies and taking up projects that have been exhausted. They may be focusing too much on competing and not focusing enough on innovation and new markets which so far has left them a step behind their rivals.
Basically, It was Imperative it is that the company figures out how to matter to consumers and marketers in the mobile era and while it has made real progress in reinventing itself for the smart phone era, statistics show otherwise when it comes to market share. Mobile ads remain a focus of Yahoo, but it owns a paltry slice (2.9%) of the $30.45 billion U.S. market, which is expected to drop to 2.5% in 2016. For 2015, Yahoo’s rival Google is at 32.9% while Facebook is at 19.4%. Yahoo is growing in the mobile space, but not strong enough to keep pace with the market rate.