Yahoo's Choices

Rich Tehrani : Communications and Technology Blog -
Rich Tehrani
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Yahoo's Choices

I have mentioned in the past that Yahoo! has no choice and that it needs to seriously consider the Microsoft offer. Since that time, News Corp. has offered an alternative to Yahoo!… The media conglomerate will give some assets to Yahoo! such as MySpace and American and in return, News Corp. will receive 20% of Yahoo!

While this offer seems ridiculous to consider at first, there are some significant synergies which should not be overlooked. The Wall Street Journal and Yahoo! Finance is probably the biggest of these.

An article by Dan Farber & Larry Dignan describes why this deal is better than Microsoft's offer of cash and stock. It discusses "clarity of mission." Basically, Yahoo! can continue doing what it is doing rather than have to deal with technology changes and other political battles as a result of a Microsoft merger.

I have to reiterate that Yahoo! is amazing. They have become the defacto launch page of the internet. They are the place you go for e-mail, news, sports, you name it. Incredible.

But with all this success in traffic generation there is a major problem within the company as it has not found a way to get customers to pony up money for these services. Advertising is not growing fast enough and the company is stagnating.

At a certain point one wonders what good all the eyeballs are if they aren't monetized.

Ironically, before Google started its search advertising programs the exact same argument could have been made about them.

Yahoo! is ten years into this game and seems to have figured out only half of the equation.

Being the president of a media company I can tell you from experience that Yahoo! has mastered the difficult part of the job. They have traffic. Floods of it. Now they need a strong team to explain to advertisers why their network of sites is where they need to spend money. But, they have had over a decade to do this.

Adding more sites to their arsenal will not help them. They have had a management change but so far this has not helped either.

What needs to happen at Yahoo! if they want to remain a standalone company and keep shareholders happy is that they need to become a company laser-focused on monetization. The should print banners and flyers that say "MONETIZE" and hang them everywhere. There should be badges, napkins, pens… anything and everything that gets their army of workers to think not so much about eyeballs but dollar bills.

If they can't monetize more effectively with such a dominant position they need to just give it up and become part of Microsoft.

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