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YAHOO JOB CUTS: CAN YAHOO SURVIVE?

"The global slowdown is eroding advertising..." says The Times, giving some helpful context to Yahoo's recent announcement of 1500 job losses. It might be churlish to point out that Google have just posted a 26% rise in profits over the same period, suggesting that Yahoo! can't really place the blame on market conditions. Unfortunately, Yahoo! have been searching for a raison d'etre for many years now and the end game may at last be at hand for this famous internet brand.

What's the problem with Yahoo?

Yahoo's central problem is simply one of identity. Google is a search engine, and despite the plethora of products they've brought to the market their homepage reminds us every day that 'search' is what Google are all about. Have you been to Yahoo's homepage any time recently?

Could you tell where you're supposed to start? Why are Yahoo making news the centrepiece of their offering? News is free and available anywhere, any time from a huge number of famous brand names across the world. Aside from the fact that a lot Yahoo's 'news' content is actually PR flummery fed through automated online PR, there is nothing that adds value to their news offering. Everything is aimed at the tabloid level, only without the cutting edge of point-of-view commentary.

Their menu too reads like the sections you might get in a newspaper... horoscopes... cars... jobs... cover up the familiar Yahoo! logo with your forearm and you could be looking at any generic news site.

Their killer app has long been their rather natty email program. Like Hotmail, it is arguable whether their pre-eminence is down to the quality of their product or just the sheer weight of numbers from a long-established history. Nontheless, it brings millions of people back every day to Yahoo to interface with advertising that sits alongside their emails as they read them.

For advertisers interested in brute force exposure there is definitely an attraction there, but as a conversion tool advertising alongside email is a poor, distant second-cousin to the power of contextual advertising alongside search.

Ironically, Yahoo's search results have rarely been better than they currently are. Whereas Google's bid to drive out commercial entities from their front page SERPS is sapping some of the value out of their results, Yahoo consistently deliver nice results - with the added attraction of some pretty cool inline search tools.

As Google have shown, search is where the money lies. It's the best possible marriage of response and demand, and yet Yahoo consistently fail to capitalise on what is now a mature, reliable offering in this sphere.

"It's the junk, stupid..."

If Yahoo are to survive without succumbing to the tender mercies of Microsoft (and you know that Steve Ballmer's licking his lips at the prospect of getting Yahoo back to the table on reduced terms) they will have to tackle the elephant in the room that they've talked around and obfuscated over for years. The very purpose of Yahoo. By clinging to the long-abandoned 'portal' format they're simultaneously offering everything and nothing.

For every great Yahoo product like Answers or Flickr, there's an utterly pointless and wasteful foray into someone else's space.

Today's Moral

Even internet titans need to know what it is they are offering. Yahoo's huge portfolio of things they can't monetise is stifling their ability to push the things that they can. With Microsoft sitting patiently in the wings, still claiming a desire to be "#2 in search within 5 years", Yahoo's days as an independent force on the internet look to be doomed. If your online offering lacks focus, then you too will find that it delivers little value to your bottom line. And in these desperate economic times, is that a chance you want to take?

Notes and Queries...