Yahoo has had a chip on its shoulder about search, aka ‘Google’, for years. The brand name synonymous with search isn’t Yahoo. Big deal.
Obviously it is a very big deal for Jerry Yang, but in focusing on the battle for ‘search’ Yahoo has forgotten about what really matters: advertisers.
Google knows this. Google isn’t a search business, it is an advertising business (99% of its revenues are generated by advertising).
Granted, a large chunk of these advertising revenues are search-driven, because Google has the most popular search product on the market. But a third of Google’s revenues can be attributed to Adsense, the Adwords-derivative that runs across its content network.
Google’s content network is made up of tens of thousands of publishers. Google has relationships with these publishers, which extend Google’s reach. That ticks a big box for advertisers.
Adsense ads are contextual. They aren’t based on search queries, but on the text found on a publisher’s page. As such they are less targeted, and they are cheaper. Nevertheless, advertisers spend billions of dollars on these ads every year. Billions. Of. Dollars.
So why hasn’t Yahoo properly rolled out an alternative to Adsense on the global stage?
The Adsense monopoly is there to be challenged. Publishers would love it if Yahoo provided them with another option, but it’s been very slow going. Here in the UK we’ve been waiting for Yahoo Publisher Network for more than three years, since it was announced as a beta product. It must launch YPN internationally, as soon as possible.
The point is, Yahoo can quickly make friends with a swarm of new publishers, extending its reach, just as Google has done. This in itself will help guarantee Yahoo’s future as a media heavyweight, acting as a conduit for ad sales beyond the realms of its search engine. It can better integrate the likes of Yahoo Buzz across its main properties, and open up Yahoo News, to feed these publishers with big traffic. Let's not forget 'The Yahoo Effect'. It has retained a loyal user base.
In doing so, it could launch a product to rival that devised by the likes of Glam Media, the display network that has attracted about 600 sites to provide with enough reach to secure more than $100m in funding on an estimated $1bn valuation. With Glam starting to annoy its publishers there is a real opportunity here.
Consider too the likes of Platform-A, the vehicle for buying media across AOL’s properties and beyond. Where is Yahoo’s version of Platform-A? Why not join things up a little bit more?
Yahoo, as a destination site, has attracted major ad campaigns over the years. It presumably has relationships with all of the big media agencies. It must surely understand the needs of advertisers, and the media buyers and planners that manage campaigns?
I’ll say it again: Google isn’t a search business, it is an advertising business. Yahoo should be an advertising business too, only I get the impression that it is desperately trying to figure out how to be a search business.
Finally, search has proved to be a winner in the past seven years. It will continue to bring home the bacon, no two ways about it, but in the next decade there will be much more to life than search.
The future is going to open up new opportunities for advertisers. Faster broadband networks will herald the dawning of IPTV, and you only need to look at the trends towards targeting and segmentation to understand that it will be a very big deal for advertisers. Who will own this space? Who will be the gateway for advertisers?
If I was at Yahoo I’d seriously want a piece of that action. I’d be planning for it. You think the TV companies will simply own this space? I don't. We’re a few years away in the US and UK, but this is a reality in South East Asia.
I’d also want to be launching tools for advertisers that will help them measure the effectiveness of their campaigns across channels. You think search ads would work so well without TV advertising? How then, might targeted search, display and IPTV campaigns measure up, in 2015?
Here’s my summary of the five things that I think Yahoo’s executives should focus on:
- Forget about search. It’s about advertisers, silly.
- Understand what advertisers want: reach, targeting, and results.
- There are more ad formats than simple text ads.
- Google makes a third of its money from ads not found on its search engine.
- Keep an eye on the future, and plan for it.
Chris Lake is editor in chief at E-consultancy and can be found Twittering here .