Has Yahoo! “blown it”?

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.

Mike Moran

Mike Moran is a Converseon, an AI powered consumer intelligence technology and consulting firm. He is also a senior strategist for SoloSegment, a marketing automation software solutions and services firm. Mike also served as a member of the Board of Directors of SEMPO. Mike spent 30 years at IBM, rising to Distinguished Engineer, an executive-level technical position. Mike held various roles in his IBM career, including eight years at IBM’s customer-facing website, ibm.com, most recently as the Manager of ibm.com Web Experience, where he led 65 information architects, web designers, webmasters, programmers, and technical architects around the world. Mike's newest book is Outside-In Marketing with world-renowned author James Mathewson. He is co-author of the best-selling Search Engine Marketing, Inc. (with fellow search marketing expert Bill Hunt), now in its Third Edition. Mike is also the author of the acclaimed internet marketing book, Do It Wrong Quickly: How the Web Changes the Old Marketing Rules, named one of best business books of 2007 by the Miami Herald. Mike founded and writes for Biznology® and writes regularly for other blogs. In addition to Mike’s broad technical background, he holds an Advanced Certificate in Market Management Practice from the Royal UK Charter Institute of Marketing and is a Visiting Lecturer at the University of Virginia’s Darden School of Business. He also teaches at Rutgers Business School. He was a Senior Fellow at the Society for New Communications Research and is now a Senior Fellow of The Conference Board. A Certified Speaking Professional, Mike regularly makes speaking appearances. Mike’s previous appearances include keynote speaking appearances worldwide

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