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The peanut butter jar is empty

I was rooting for Jerry Yang. Tech founder returns to helm to take over. That's a story I have to get behind.

But it never seemed to me like he was fully in charge. I wonder how many stakeholders Consensus had over there in the top suite.

It is okay to blame terry, he has been paid very well, by any standard in corporate america. including his stock grants, semel has certainly extracted hundreds of millions of dollars in compensation. For that much money it is fair to expect results. while he doesn't strike one as the type of person to grasp the viability of search, he has surrounded himself with advisors who certainly should have been able to make this assessment.

One can also turn some blame on jerry yang, who was instrumental in attracting terry. Jerry should have known that such a technophobe would have problems dealing with the inevitable semi-technical issues that a yahoo ceo would have to grasp on some meaningful level. It was those senior yahoos who were engaged in the ceo search who incorrectly assumed that yahoo was simply "another media company", and their search was predicated on this. Had they understood that this generalization was meaningless, they would have directed their search elsewhere.

But to be fair, the winds of the internet have shifted. no one cares about "integrated networks" like yahoo and aol anymore because they have failed to deliver more utility than the rest of the web. Google is a rest-of-the-web company...its search and advertizing products leverage the entire web instead of trying to fight it. I'm not sure anyone at yahoo saw this coming.

    -- comment to Speculative Fiction, on Terry Semel's decision not to buy Google

Rumors about a msft or some private equity takeout of Yahoo have been bobbing around for years. Sure, Yahoo could do (could have done?) the monetization deal with Google, and become Google's #1 adsense publisher. But on the product side...what would you do?

Take a look at Yahoo's list of products:

Sixyt-one services! 61! How do you wrap a brand around that?

Yahoo used to mean "search", back in 1995. Then they line-extended their name onto everything...even physical stuff, like credit cards and mice and keyboards and a magazine (a real one, on paper!). Now what does Yahoo mean? What is the first word that jumps into people's heads when they think of Yahoo?

I subscribe to Trout-Ries branding. Line extensions == generally harmful. But it's the default silicon valley product manager launch move. You trade short-term interest in a new product for long term damage to the core brand. It takes 5-10 years to build a major brand. And it takes 5-10 years for the full effect of line-extensions to erode a strong brand.

Long after the folks responsible for junk like this have moved on, the effect remains in consumer's collective subconscious memory.

Think about it... Yahoo doesn't mean keyboards. They didn't do plastics or ergonomic research or think of some insight about key travel distance or how audible the click should be or do wireless really well. Apple thinks about that stuff when they do a design. They work closely with the manufacturers to find out the latest materials and new techniques they can incorporate into their products. But Yahoo didn't do that. They just slapped their name on a box.

Anyone who passed this keyboard sitting on a shelf in a store could see that. How many people saw the box vs. bought the thing? They sold some keyboards, but far more people saw the message of the keyboard. A message that Yahoo wasn't only about their directory or search functions. Or even about their website. Yahoo does everything! no... the message was that Yahoo was willing to put their name on anything.

Trout-Ries: If you do everything, then you do nothing...

Mike thinks Yahoo Mail is the first thing that comes to mind for people when they think of Yahoo. I asked my wife, she said Yahoo Groups.

I asked her why she didn't use more Yahoo stuff.

"Well, if you think of the web as a giant marketplace, and you're looking for something, you could go to the "Yahoo company store" and look at what just they have, or you could go through the main door and look at everything."

"What's the main door?"

"I don't know, I guess I just use Google."

Sixty-one services. Not just names on a site-map, they're groups in the org chart.

Google should take a close look at this. They're up to 39 services. 39!

This story is over... now the cycle can start over with Google. I do hope that Google's brand-extending product managers diligently continue their efforts this year. :)

Comments (9)

emily:

As a highly nerdy early adopter type, I gave up on Yahoo years ago. The only current products of theirs that hold my interest are two that they acquired rather than developed, flickr and upcoming.org

The only hold-outs among my equally nerdy circle of acquaintance were some old-timey former yahoos. They finally crossed over and went Google a couple years ago too.

I agree, they've gone in so many directions at once that none of them are standouts. I'm a firm believer in doing one (or a few) things, but doing them better than anyone imagined.

nice perspective rich.

altho, one could argue that if portal strategies that "extend" the Yahoo brand across multiple [possibly acquired] aren't working, perhaps the answer is to simply let the individual properties develop their own brand (and certainly, their own keywords & SEO).

i don't think the reason that Yahoo isn't competitive is because they have 61 services -- it's because Yahoo search monetization sucks compared to Google.

On the other hand, each of those 61 services DOES get benefit from having Yahoo's mass market audience pointed their way every so often -- but that doesn't have any bearing on brand i think. that's just traffic.

regardless, none of this armchair quarterbacking is going to change the fact that either:
1) Yahoo gets bought by MSFT, or
2) Yahoo gets taken private by a private equity fund

however either of those two options will put a lot of those properties in play, and provide additional opportunity to tweak & tinker with structure to create more value.

the challenge with any portal these days is that the portal strategy only adds traffic, not brand, benefits. but that's ok, you just need to know how to leverage it appropriately.

Traffic can be leveraged by buying smaller properties with interesting tech / monetization, and pouring lots of portal eyeballs at it (and theoretically, if you've got good search and/or transactional monetization, by moving the eyeballs towards those areas).

in any case, i agree with you that Yahoo has diluted its brand far beyond any level of useful utility. but it hasn't necessarily done enough with sending traffic to individual properties / subsidiaries, and providing incentives for sub managers to drive for performance.

we'll see if the new master (MSFT or hedge fund) makes that any different.

Mark:

Here in Japan Yahoo has just as many services as in the U.S. (and drove eBay out of the market in auction to boot), and it's number 1 in everything it does.

So the brand extension generalization of Trout-Ries doesn't apply. How much do they know about the tech world (compared to Semel), anyway? Maybe Semel should stick to the movies and Trout-Ries should stick to Oreos.

The secret is traction and critical mass, and maintaining it. Yahoo slipped up here, but what they are trying to do is fundamentally not impossible.

I view this as just a financial thing. Microsoft wants to buy Yahoo because it can, and the fact that Yahoo is publicly traded lets them do it. But at its core this is just vandalism. A great company will be cut up and destroyed, and it won't particularly change Microsoft's fortunes in the end. Perhaps Yahoo could mount some sort of comeback five years from now, but we'll never know. Google will not benefit: it will exacerbate their future antitrust woes and take away a good competitor, which all companies need to have.

The USB drive that I bought the other day had a google logo on it.

Google and Microsoft have just as many services as Yahoo, perhaps more. Google leads in search and video. Yahoo leads in just about everything else.

http://boulter.com/yhoovgoog/

There are far fewer than 61 different orgs. Fantasy Sports is listed 3 times for some reason in that list, Finance twice. Many groups work on multiple products.

Chris Tolles:

Yahoo *is* the number one traffic source on the net.

Yes, in retrospect, owning search is better than owning everything else, given the eCPM's in the space -- but you gotta give them credit for recirculating more traffic to their properties, and being the #1 player in a couple of spots -- Yahoo finance, Yahoo news being the biggies.

They also killed Yahoo Photos and Flickr is #2 behind photobucket (which really is more of a storage house for icons).

I think they tried for a "Yahoo = the Internet" strategy years ago, which is now being unwound, and you have to give them credit for the best recirc in the universe tied to Yahoo News

It's too bad that the likely future here isn't a discliplined approach to branding and a market case to the world that while Yahoo isn't Google, it's pretty cool nonetheless, but getting bought by the people who are bringing you "Windows Live Hotmail".

Someone should make CMO's read "The Good Earth". :-)

I don't think the problem is the multitude of products. Granted, the keyboard and the magazine are bad ideas, but the online properties are not necessarily bad for the brand.

Google also has services all over the place: Google Maps, Gmail, Blogger, Groups, Documents, Video (both Goggle and Youtube), RSS services (Feedburner), Shopping (Froogle), etc... you name it, they have it.

I think that Google is successful because it dominates search, and that drives everything else. The real problem is not having too many products, but not being remarkable in any of them and not having anything you can leverage to make all those other products successful.

Dave:

I think Google gets away with it because most of their services are intimately tied into search, whereas Yahoo is a content provider. Using Google services is a really short step from using their search - maps, news, mail, they're all very tightly coupled together compared to Yahoo's stuff.

"They also killed Yahoo Photos and Flickr is #2 behind photobucket (which really is more of a storage house for icons)."

#2 behind photobucket in what sense? Isn't photobucket just like imageshack? Flickr is by far a stronger brand in my mind.

"I think they tried for a "Yahoo = the Internet" strategy years ago, which is now being unwound, and you have to give them credit for the best recirc in the universe tied to Yahoo News."

Yahoo News? Never used it. BBC News! :)

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