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Yahoo: Thanks for the Idea, but Nope

By - September 10, 2007

Yahoo apparently considered outsourcing search monetization (WSJ), but decided against it:



….over the summer, Mr. Yang did actively assess one major sacred cow: the Web-search-advertising business it built up at great expense in recent years. Under the scenario discussed by top executives, Yahoo would have outsourced that search-advertising activity — which places small text ads next to Web search results — to either Google or Microsoft Corp., the people say. One of these people says Yahoo raised the idea with Google.

Such a move would likely give Yahoo an immediate revenue bump representing hundreds of millions of dollars annually, because Google, for one, generates about 40% more revenue for each consumer search than Yahoo, according to Majestic Research Corp. in New York. It could also bring in additional one-time payments from any outsourcing partner and would reduce some of Yahoo’s operations costs and capital spending.

But one of the people familiar with the matter says Mr. Yang concluded that Yahoo needed to be the “marketing operating system,” providing advertisers with a full menu of online-ad options.

My previous “modest proposal” on the subject here.

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7 thoughts on “Yahoo: Thanks for the Idea, but Nope

  1. The bottom line is relevant search results; Google is noticeably ahead of the others.

    Google has also successfully branded itself – while Yahoo never really the potential of branding itself to the consumers in the beginning.

    It is trying much harder now, but it is more entertaining as a news and entertainment portal. People may be less likely to click on ads if they are not specifically looking to buy something.

    Yahoo search users tend to click on the first links that appear in the results. Google search users may be more proned to compare and analyze organics and advertisers to get a better bargain. Thus driving more money to Google.

  2. Bruce says:

    Yahoo strength is in content whereas both G & M’s strength is in technology. If I were Mr. Yang’s shoes I’d put my resources fully into what you do best (content) and team with those who do what they do best (technology). As my Dad used to say “you can do anything you just can’t do everything!” Even Google knows that. Also, just imagine the fight that would ensue to become Yahoo’s marketing services ops?

  3. stone says:

    This is not a good leak for Yahoo. Why in the world would any publisher work with Yahoo after they contemplated outsourcing search to Google? And, what ever happened to Panama? I thought that was supposed to be the silver bullet? What’s going to happen when all the publishers in the world realize that Yahoo isn’t good at monetizing ad inventory? Ouch!!!

  4. NewsCrawler says:

    Yahoo is moving away from being a central content publisher with limited monetizable inventory to becoming a central open ad “exchange” through which advertisers place relevant ads on its vast network of publishers and partners. Outsourcing search to google strips yahoo of a key offering in it’s advertising portfolio. Also, Yahoo’s plans of monetizing traffic outside it’s network (like google does today) should provide an pretty good upside to its revenues

  5. Stone says:

    This assumes that Yahoo is good at driving Yield for publishers. There’s *zero* evidence that this is true. Can you name a large publisher partner that works with Yahoo because they yield well? I can only name eBay – a deal I think they’ll eventually lose to GoogClick becuase DoubleClick is eBay’s ad server right now. Yahoo’s Content Match program has been viewed as a joke from day one.

  6. “This assumes that Yahoo is good at driving Yield for publishers. There’s *zero* evidence that this is true. Can you name a large publisher partner that works with Yahoo because they yield well? I can only name eBay – a deal I think they’ll eventually lose to GoogClick becuase DoubleClick is eBay’s ad server right now. Yahoo’s Content Match program has been viewed as a joke from day one.”

    I Agree with this guy….

  7. NewsCrawler says:

    “Can you name a large publisher partner that works with Yahoo because they yield well?”
    The newspaper consortium representing hundreds of newspapers, Comcast, eBay and Bebo (today). Yahoo has focussed its efforts over the past year on building technology to improve yield and I hear there is more on the way. They recognize the importance of driving Yield for publishers and so are the most aggressive among the Big-3 (MS, G, Y) in striking relationships with them.. I for one, have a positive outlook on them given their recent moves to get back on the saddle.