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Wired magazine has a strong (and long) criticism of Yahoo!’s search execution that it calls “How Yahoo! Blew It.” Wired correctly notes that Yahoo! had a chance to best (or at least keep pace with) Google, but that Google is solidly #1 now. (In fact, the big controversy lately has been whether Google’s dominance has been underestimated.) So, has Yahoo! blown it?

Clearly, Yahoo! has watched itself lose ground in search to Google over the past couple of years. When Yahoo! first weaned itself from Google’s search technology, they were neck and neck, with most estimates placing both companies in the 30s in market share—albeit with Google consistently in the lead.
Since then, Google has steadily gained, until now it approaches 50% share by even the most conservative estimates, with Yahoo! drifting down toward 20%. What happened?
The Wired article focuses, fairly I think, on execution. Yahoo! had a decent enough strategy. They acquired Inktomi, FAST, AltaVista and other search technology to create an alternative organic search engine to Google’s, and acquired Overture to ride their own horse in paid search. But Yahoo! has been quite slow to integrate them—even now its overhauled paid search platform, code-named Panama, is not completely available around the world. (That should happen by March.)
As with any competition, you have to ask, did Yahoo! blow the game or did Google win it? In my opinion, Yahoo! made some missteps, but Google has been amazing in terms of its execution. No less a company than Microsoft has been falling even faster than Yahoo!—it’s Microsoft that has really blown it, I think.
For all of its failings in search, Yahoo! has many winners. The Flickr acquisition is an example of Yahoo!’s difference in strategy from Google over the years. Yahoo! is still virtually tied with Google as the most-visited property on the Internet, showing how its focus on being a portal rather than only a search engine has paid off. Google, in fact, has begin to emulate that strategy by building destination sites, such as Google Maps, Google Earth, Google News, and even acquiring YouTube. Google has so far beaten Yahoo! at its own game (search) but it’s to be seen whether Google beats Yahoo! as a portal.
The interesting thing about keeping score in business is that the games are usually called before they are actually over. People can say that Yahoo! blew it, but it is more accurate to say that Yahoo! has been blowing it. This game is far from over.
Yahoo! Answers has dominated its niche, causing Google to withdraw its competing effort. Yahoo! is clearly focusing on social search, which has the ability to be a game-changer. Yahoo! could still use Flickr to create a great social image search—is this coming? This is a prime example of how Yahoo! has everything it needs to win in search, if it could just put things together. In sports, when a team has talent but fails to win, they usually fire the coach, so Terry Sempel may be on the hot seat now.
Yahoo! will have to shore up its execution to take back ground in search, but I don’t think they should be written off yet. (Nor should Microsoft.) So buy some popcorn, and sit back and watch. It should be a good game.

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Mike Moran

About Mike Moran

Mike Moran has a unique blend of marketing and technology skills that he applies to raise return on investment for large marketing programs. Mike is a former IBM Distinguished Engineer and a senior strategist at Converseon, a leading social consultancy. Mike is the author of two books on digital marketing, an instructor at several leading universities, as well as a Senior Fellow at the Society for New Communications Research.

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