Yahoo Tries Harder Again (Maybe to No Avail, but We Like Its Spunkiness)

Let me just repeat this one more time with feeling: Many, many of the products Yahoo makes are superior to those made by Google.

Yesterday, in fact, it deserved plaudits for grabbing the top spot on the University of Michigan’s American Customer Satisfaction Index report on Web sites. Yahoo’s score rose 4%, to 79, with Google declining to 78, a 3.7% drop and its second annual decline in a row.

That’s great for Yahoo, as it might signal a turnaround sign for the beleaguered Internet company. Except for that one niggling detail: Yahoo still cannot monetize its ad search as well as Google.

That situation, of course, might improve as its new Panama gains traction and also via the success of new technologies like SmartAds related to its recently weak display-ad business.

Newly installed CEO Jerry Yang is doing a top-to-bottom review of the company’s business that he announced during the last quarterly call with analysts to find improvements, including calling top talent at all levels of the company personally to buck them up and prevent a job exodus of those needed to make key changes.

But the state of its search and search-ad business will remain at the center of attention for the foreseeable future.

In a post last week, I wrote that the company was even going as far as considering an option to offload some of its search and ad-search business back to Google.

Such a move, even if done in part, could instantly add a whole lot of dollars to its bottom line, drastically cut tech costs and remove the focus on its constantly losing fight with Google as a tech leader.

“Better still, it would put Yahoo in a position to focus on its more competitive assets, such as outstanding media properties like Answers, Flickr and a range of tools and features that Yahoo does better than Google and many others.”

I did note that some might think the idea seemed “ludicrous.” And we got some great comments on this, many especially noting the need for a strong No. 2 alternative to the dominant Google.

But the most cogent argument against such a move came from longtime search guru Danny Sullivan, who wrote a long and convincing comment about why Yahoo should not do this, which I print in its entirety below:

Yes, the idea does seem ludicrous. For good reason. It would be a stupid thing to do.

“First of all, Yahoo is the strong No. 2 to Google. I suppose Avis should just give up renting cars and leave it all to Hertz? No. 2 is perfectly fine if you’re running a profitable business.

“Ah, but Panama disappoints. Um, we’ve had Panama for about four months or so. The execs in the previous quarter said give it one more quarter to kick in. That came, paid search was up–in fact, apparently the shining star in Yahoo’s revenues, and they should bail out.

“Seriously? I mean sure, I suppose they could take 80% or 90% and save the tech side. But then again, Microsoft launched its own paid solution. Ask did. AOL did. All three are playing catch-up to Yahoo, which has more history with paid search because of its Overture roots than Google. Give that up?

“Google execs keen on the idea? Why wouldn’t they be. But why not, because Yahoo gave Google its first big break? Actually, that would be Netscape. Getting Yahoo helped Google some, but Google would have been just fine without Yahoo, despite the Yahoo execs that think they somehow ‘made’ Google by allowing barely noticeable branding.

“Hey, I see lots of friendliness between Yahoo folks and Googlers–but make no mistake, Yahoo folks have plenty of competitiveness to beat Google. And why not–they do in many areas.

“And Yahoo losing market share? What, a year basically holding its ground in the face of both Google’s dominance and Microsoft’s attempt to gain ground, and people aren’t using it to search much.

“In the U.S., Yahoo has been slightly down the past four months according to comScore:

http://searchengineland.com/070716-232238.php”

I would agree with all Sullivan writes, except for the fact that it is critical that Yang and his team at least consider every single option that would move the needle significantly. And, of all the moves they might make, this one surely would change the company’s economics most drastically.

And, of course, Google would love such a capitulation–doubtlessly, they’re rubbing their hands together like Sylvester Sneekly, (a.k.a. The Hooded Claw) right now over the prospect.

There are a lot of options for the company, from “widgetizing” its apps to selling itself to doubling down in search even.

But the key issue is deciding exactly what Yahoo’s business going forward is: Is it a technology company, for which search is the heart of the enterprise? Or is it a media outfit, for which building ad-rich distribution networks of content and consumer tools is the focus? Or is it both? More importantly, can it be?

While I realize this is simplifying the stakes in the extreme, defining what Yahoo is and articulating that will be perhaps the most important thing Yang can do going forward. His problem is that Yahoo has portrayed itself as a lot of things over the years.

To me, at its heart, Yahoo has always been what it started out as and the acronym its name was created from: Yet Another Hierarchical Officious Oracle (although it was originally “Jerry and David’s Guide to the World Wide Web,” after Yang and other co-founder, David Filo).

While wrangling and making sense of the Web has risen in quantum levels of difficulty since Yahoo was founded in the mid-1990s, that goal of being a trusted oracle (like the one at Delphi, pictured above) is not a bad one still.

With its immense traffic and ability to satisfy customers alone, Yahoo could still lead the way.

Please see this disclosure related to me and Google.