On Mayer, Yahoo!, and The (Other) Customer

Mayer at the Web 2 Summit, San Francisco

(image James Duncan Davidson)

I try to let big news percolate for a few days before weighing in, and it seems even more appropriate to follow that playbook when it came to the scrum around Marissa Mayer joining Yahoo.

Yes, I’ve known both Marissa Mayer (and Ross Levinsohn) professionally, for more than a decade, but so do many other folks, and it seems nearly all of them – Steven Levy and Kara Swisher intelligently among them – have weighed in, multiple times, on what this all means. If you want a rundown, just search for “Marissa Mayer” in Google News.

The coverage has taken its usual course from “Holy Shit!” to “What Will Happen to Ross?” to “Wait, Is Mayer Right for the Job” to “Here’s Our Advice/The Things That Need  to Be Fixed/What Mayer’s Focus Should Be” types of pieces.

This won’t really be any of those. Instead, I find myself thinking about the things I’ve not really seen much coverage of, at least in depth. And true to what I’ve spent a fair amount of time thinking about, they all come down to the intersection of media and technology, and the role marketing plays in that landscape.

When I spoke to Mayer after she was named CEO, I asked the question, almost as a joke – “So is Yahoo! a media or a technology company?” She was quick to respond that she just does not get the debate – of course it’s both. What matters, she pressed, is creating great products that surprise and delight Yahoo! customers.

I couldn’t agree more, yet there is an important nuance here – just who *are* Yahoo’s customers?

Let me step back here and posit something that might upset more than a few of you: Yahoo has two sets of customers, and of course the “end user” is one of them. But the other is the marketer.  And media companies – or “tech companies driven by media revenues,” or however else one might want to phrase it – sometimes ignore this fact at their peril.

I’ll let those of you who find such a statement anathema go ahead and click away – here’s a nice unicorn chaser if you’d like – or you can flame me in the comments (I do respond to most, as long as they’re in English and don’t employ more than the occasional insult).

But those of you who’ve continued to read probably know that I believe, deeply, that commercial publishing is a conversation between three key parties: The reader (or viewer), the publisher/content creator, and the marketer. And while it’s generally been true that this conversation has been all kinds of broken during much of the web’s history, the truth is, it needn’t be that way. Six years ago (!) I wrote a series of posts describing the rise of conversational media and imploring that marketers learn to join the conversation. I think it’s fair to say that this is happening, at scale.

Beyond the contributions of pioneers like Federated Media (yes, I had to plug us), the rise of “native” advertising formats is proof of this. Twitter’s promoted suite is one growing example, as is Facebook’s Sponsored Stories (and its attendant focus on getting brands to be true publishers on the Facebook platform). Pinterest, WordPress (in partnership with FM), and Tumblr are hard at work on “native” solutions for their services as well. All of these advertising solutions pale, however, in comparison to the original “native” advertising format of the Web: Google AdWords.

Many have pointed out that Mayer’s principle weakness, when compared to Levinsohn, is her lack of traditional media and marketing chops. I can say from very deep experience that the marketing business is very much a relationship business – CMOs and agency leaders live in a world driven by ideas, creative and content – and they want to know the people who they do business with, and trust them in a way that is difficult to model algorithmically. Mayer’s detractors point out that she’s not spent much time wooing Madison Avenue, or dealing with the inevitable headaches born of the complex, people-driven businesses that are agencies, marketing clients, and content partners.

While there is some truth in this criticism, I think it overlooks a few things. First and foremost, Mayer is a very fast study, and she already knows how important the traditional media business is to Yahoo. Hell, a quick overview of the company’s financials bears this out, as does a visit to any of its properties, which are dominated by advertising. Yahoo may have a lot of technology behind the covers, but its products are nearly all media products – content intended to gather an audience and provide a place for marketers to message to that audience. More than half of Yahoo’s revenues come from “display” advertising, most of the rest comes from search, which is also marketer driven.

Secondly, Mayer will be a big draw of talent, and not just engineering talent. She understands that if she can’t retain Levinsohn and/or his recent CRO Michael Barrett (I certainly hope she can), she’ll need to attract top tier media minds to the business. And I think she’ll succeed at doing just that.

But to me, the thing many are missing is that Mayer will bring her fanatical product focus to more than just Yahoo’s consumer-facing media offerings. She’ll also be staring at the company’s advertising products, and asking this simple question: How can we do better?

To answer that question, Mayer will need to do more than study the data (though of course, that will be important). She’ll need to sit down with a wide swath of Yahoo’s marketing customers and ask them what they want from their investment in her platform. She’ll hear an awful lot of conflicting advice, but it’s in the bricollage from all the feedback that the best ideas come out. Mayer can’t afford to immediately tack away from all those boxes and rectangles cluttering up the Yahoo! experience, nor should she – it turns out that display advertising does indeed work for marketers. But the larger question remains: Can we do better?

The answer lies in executing the subtle and ongoing iterative work of true digital publisher – improving the core product experience both sets of customers – consumers of the media experience, as well as marketers looking to be part of that experience in a more native fashion. And again, from a quick study of Yahoo’s products, there’s plenty of improvements to be made.

An important and related part of the work ahead for Mayer and her team will be deciding what role ad tech and search will play in Yahoo’s future. Despite purchasing Right Media back in 2007, Yahoo has never been seen as a leader in ad tech, and word on the street in the weeks prior to Mayer’s ascension was that Yahoo was about to outsource its ad technology platform to market leader Google. Of course, such a move is fraught with regulatory and business implications. And Mayer may well decide it’s in Yahoo’s best interest to invest in own its own destiny when it comes to the machine-driven world of ad serving and programmatic audience buying. But trust me, what Yahoo does here will be an extremely important directional indicator.

Which brings us to search. It’s been widely reported that Yahoo’s 2009 deal to outsource core search to Microsoft hasn’t worked out as well as either party wished it would. Given how important search is to Yahoo overall, and how deeply knowledgeable Mayer is in this particular field, I’d expect big changes in Yahoo Search. The company recently unveiled a new search product called “Axis,” which seems like a neat idea but feels a bit too complicated for most consumers to really grok. Mayer will likely take Occam’s Razor to search, and I expect the results will be quite positive.

But it’s the other side of Yahoo’s revenue equation – the branded display market – where Mayer will face her greatest challenges, and find her biggest opportunities. Yahoo isn’t a startup like Pinterest, Tumblr,  or even Twitter, where founders can leverage massive user growth to raise enough capital to “figure out how best to implement appropriate native marketing solutions.” Yahoo is nearly 20 years old, and it’s got a very deep, tangled, and somewhat tarnished brand in the minds of its best advertising customers. It’s true that creating world-beating consumer-facing products will go a long way toward fixing that brand. But those products must be informed by – and even created for – both sets of customers – the consumers of content, as well as those who pay for them to be created in the first place.

20 thoughts on “On Mayer, Yahoo!, and The (Other) Customer”

  1. I agree, John.  So many of us (non-G employees) in the greater Online Marketing world are pulling for Ms. Mayer to “take back” Y! & steer it once again in a competitive, compelling direction.
    And for those new to “native advertising”, Stan Greenberg defines it well here: http://www.contentnotads.com/native-monetization.

  2. Interesting and thoughtful, John.  I so liked your reference to her iterative approach that I heard her describe many years ago, about getting things up and then tweaking so there there in a sense is no such thing as the final product but a daily slight improvement.  However I think you indirectly put your finger on part of the challenge, who is Yahoo’s primary customer.  My sense is that part of the problem is that they haven’t decided.  Google’s customer is someone who wants to find something fast.  Google expanded beyond that but that’s still their customer and speed of delivery is still crucial.  And that’s probably built into every other part of their business.  But their first priority is that customer.  Everything else follows.  I don’t know what that means for Yahoo.  And I don’t know what they are best at.  

    It seems to me her first job is for Yahoo to decide who they are and what their goal is and integrate that throughout the company and let go of as much else as possible.  If other stuff comes from that focus (the stuff that come with Google’s focus on search speed and usefulness), great, however that’s not the drive.  
    I think having a keen eye and understanding what they want to be best in the world at (the Drucker questions of what can you be #1 or #2 in the world at and would be in this business if you were starting out are valuable backdrops) will be key to their future.  In a sense, one might even say, can she move Yahoo the brand to as clean a brand in both value and focus as the Google homepage is that she so famously kept uncluttered and indispensible.  

    Let me add one other element that I think relevant.  The reference at the beginning of Levy’s book of Mayer being annoyed that an engineer on a trip (to China perhaps) was focusing on revenue rather than customer satisfaction is, suggests that she has a very keen eye.  Thanks John.

    1. It’s an age old question – who is the customer to a publisher? And the answer is…yes. You make a great product for your reader/consumer, but that product must also satisfy and deliver for your other customer, the marketer. It’s a balancing act, and it’s not an easy one. Thanks for the thoughtful comment.

      1. Its a little tough to argue with you given the gap in our experience practically speaking. However I assume that ideally some end-user is your customer and that you wish to delight them somehow. And though that’s not the end of the story, I do think that has to be the foundation. Particularly in this day and age of infinite choices. However I agree completely that for Yahoo to survive and prosper they need to be able to leverage that end-user to make money. Thanks for the response.

      2. It’s not necessarily either or. It depends on the type of media business. You don’t make news articles or analysis or service content for marketers, you make it for readers. But what kind of *advertising* product are you going to make, that gives marketers a way to join the conversation in context of that consumer content? That’s really important. So far, the standard has been bigger and more intrusive banners. I think that is changing (I’ve written a lot about this and will probably keep on writing a lot about it!).

  3. Nice post, John.  One thing I haven’t seen in the coverage on Yahoo over the last few days or the last few years is that it’s still a huge force globally. When I work with my colleagues in India and Japan, for example, Yahoo! is a big deal. With it’s chronic cricket craziness, for example, Yahoo India’s dominance of online cricket news cannot be underestimated.  Aside from  U.S. provincialism, do you have a POV on this? 

    1. Thanks Brad, and very good point about international. It’s a differentiator that could be a big plus for Yahoo, and I know there are a ton of Google colleagues Mayer might tap to help revitalize that part of their business…

    2. Yahoo also is a big brand in the Arab speaking world since their purchase of Maktoob in 2009 (Arabic user generated content site) and they recently licensed Yamli (Arabic transliteration tool). Still, they do have an uphill market in US/Canada and other important markets

    3. Yahoo Japan is a joint venture, Yahoo Incs owns less than 35% stake. it’s actually part of the assets Yahoo Inc is trying to sell.  I don’t think it’s the Yahoo brand that makes it a success in Japan, the folks at Japan simply have done a great job in localization, and offer better products than their US counterpart. 

  4. John, I always appreciate your insights! But this posts reads a bit like motherhood and apple pie doesn’t it. The issue you bring up is true for all two-sided business models, and as you say is an age-old reality if not problem in publishing. I guess the newer questions for internet businesses and with the rise of social media are around how to effectively leverage network effects within such business models. But maybe I’m missing your point on this one?

    1. My point is that Marissa is very good at product as it relates to the consumer, but she’s going to have to learn how to do that in the context of brand advertising. Doing that is not new, it’s what publishers have done forever. As for the social/network effect side of the equation, I think great products and content are naturally shared objects. Leveraging that isn’t rocket science.

  5. I feel bad for RL; he never had a real chance to stretch and develop higher aspirations for Yahoo. But that’s in the rearview mirror now and what you’ve described as Yahoo’s two sets of customers is a big challenge. From my POV, it ultimately comes down to the end-user experience, and that’s where they’ve really lost ground. Unfortunately, Yahoo has failed to transform and pair their rich content based model with a deep social experience.

    Where to begin?  Build more “user self-marketing” features; that’s where the need improvement.Best of luck to the New CEO!

  6. First post on Marissa Mayer post her CEO announcement that spectacularly touches two of the most important elements on Yahoo Business 1. Users 2. Marketers. Everything else really doesn’t matter.

    John, i think what yahoo really needs today is to revonate their existing products and make it look more like web 2.0 or web 3.0. If you see Yahoo’s most trafficed portals eg. Yahoo finance, Yahoo Sports, Yahoo OMG,Yahoo news, their homepage and some other, they haven’t changed since past 5-6 years. They are not social. They do not allow you to connect with other users. It is surprising to know the fact that Yahoo still does not have a ‘Follow’ button on any of their portal. They do not allow you to have conversations. I think personal touch is missing in most of the Yahoo products. Which is a must for higher engagement on any consumer products. If you look at most successful consumer internet products Facebook, tumblr, youtube, pinterest, twitter, instagram, social cam etc etc  they have few things in common. They all have ‘Follow’ button deeply integrated in their products. They allow us to “CONNECT” with other people of our interest. They all have a personal touch and thus these products become integral part of our lives.

    I think yahoo needs to crack that first and win their users back. They have a great great social product “Flickr” which i think could well have become Instagram had they pivoted and adapted themselves to the changing habits of the users. 

    Winning marketers is absolutely equally important because they write cheques to Yahoo. But before that i think winning back users is more important and should be a priority. And i think Marissa being a product person, is a good fit compared to levinsohn and other non-product people.

    Anuj Agarwal

    1. Thanks for the thoughtful comment, and I agree. The two should be coordinated, however, it’s not going to be good enough to do just one or the other.

  7. Hi John.

    Interesting read about Yahoo. I am not sure what will happen to this
    company and I don’t know if they can transform to something different and market
    relevant. It is 20 year old company which sometimes look more like AOL
    compare to the ‘new kids’.

    My comment is about the search and the new Yahoo! Axis. (BTW: As I write
    this, I still can’t get the app on my iPad. Apple plot??) I would propose
    that nobody really does search properly. The problem is that by trying to
    be all to everybody, search doesn’t serve well anybody. Think about the
    way you search for things. Sometime you do ‘quick’ search – I am looking
    word definition, quick fact, restaurant, etc. Quick type, few words, easily
    done on your mobile device. Then you do ‘re-search’ – I would like to know
    about topic, but need to understand relationships. Requires differently
    worded questions, following numerous links, bookmarking pages, etc. It is
    done easier on non-mobile devices. Another type of search is a ‘social search’
    – I need to know about something, but I also need to know, who knows about
    it. The simple example is ‘I like to go to restaurant which my friends
    approve’, but can quickly grow into very complex exercise.

    We can analyze what’s wrong with the search by showing examples from Google
    – Google created this sub-second response, instant gratification search,
    which works reasonably well for the first type, the ‘quick’ search.
    Anything beyond that gets tricky. Its attempt to perform search across multiple
    properties/domains is cute. See for yourself – go to google.com, type your
    name and start clicking across the various tabs at the top. You can get
    results about yourself on the main page, images (btw: Nice finger pointing picture),
    gets funny on the map tab and completely breaks on YouTube, GoogleDocs.
    Google is not even capable to perform search within its own systems!! When
    you try to ‘re-search’, Google’s ability to interact with search results is
    C+ at the best. This looks like where the new Axis app is going. It allows
    people to interact with search and keep the search results. Finally, the
    ‘social search’. You are completely out of luck with Google (nope, Google+
    doesn’t count) and you go either a) where people socializing, or b) to
    specialized sites like Yelp.

    In summary, Yahoo is on the right track here. In order to be truly useful,
    it should add the human element. Without it, it will remain just neat tool.

    Thanks for your time reading this.



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