So Yahoo has binned 1,000 employees amid talk of “game-changing” action that it hopes will rekindle its fortunes. The game, in Yahoo’s case, is online advertising.

The thing is, Yahoo doesn’t need to change the game, only to play it properly. Or to at least speed up its moves. Because if you want to see a killer example of tardy gameplay, look no further than its lame – and ongoing – failure to roll out the long-awaited Yahoo Publisher Network (YPN) internationally.

Make no mistake, YPN is a killer app for Yahoo. It is something publishers crave. A no-nonsense guaranteed winner. A definite game-changer that would earn many tens or hundreds of millions in quarterly revenue were it to execute it well.

Extra revenue is something that Yahoo desperately needs. But perhaps more than that, Yahoo needs a bona fide victory against the all-conquering Google. It feels like a long time since Yahoo ‘won’ anything, something that is reflected in its ailing share price.

So why, some 30 months since the launch of YPN was announced, is it still in beta? And why are there no signs of action outside the US, despite noises about an international launch as early as 2006? And why is Yahoo so bad at responding to questions from interested publishers with monthly page impressions that run into the millions? Only Yahoo knows, and Yahoo isn’t telling.

Let us not forget that this is the company that bought Flickr, a project based on an agile approach that worked extremely well. It acquired Flickr in March 2005, months before announcing YPN to the world. So much for the ‘release often and early’ mantra.

And it’s not as if Yahoo’s executives don’t know about the opportunity cost. We’re talking big bucks here. They may be in denial about all things Google (I’d be pretty fed up too), but the numbers paint a very clear picture.

Ready to take a look?

Ok, take a deep breath, if you’re at Yahoo - in the third quarter of 2007, Google generated $1.45bn in revenue from Adsense (internationally). That’s not much less than the $1.76bn Yahoo generated in total revenue in the same period.

Google’s revenue from Adsense adds up to a rather tremendous $6bn a year. Less whatever it pays publishers of course, which I’m sure – for the vast majority – is much less than the 80% I’ve seen suggested elsewhere. But nevertheless, that $6bn is ripe for the taking. At least some of it.

The delay has led some conspiracy-minded people to question whether Google has paid Yahoo a ton of money NOT to launch YPN in Europe and beyond. Because make no mistake, when YPN does launch, Google will suffer. So why it is taking Yahoo so long to muscle into this space?

Publishers demand YPN

When – or if - YPN finally comes to market, there will be a mass migration of publishers that will move away from Adsense to see what Yahoo has to offer. More revenue, if you believe what some of the participating publishers in the US are saying.

Here’s a brief list of the things publishers commonly complain about, with regards to Google Adsense:

  • Lack of transparency. 99.9% of publishers in the Adsense network have no clue as to what cut they’re getting, unlike pretty much every other ad network in the world, where revenues and profit share are clearly displayed.
  • Communication. Google provides little in the way of support for most Adsense publishers. It has an optimisation team, but communication is not timely and Google’s idea of optimising ads is placing more ad units on the page.
  • Falling revenues. Many publishers have experienced huge falls in revenue since September/October 2007. ‘Smart Pricing’ has been blamed – good for advertisers, bad for publishers. I think the real reason for the decline is because Google made some changes recently to minimise ‘accidental’ clicks. One wonders whether we’ll see Google’s Adsense revenues decline as a result.

At any rate, it is clear that Yahoo has a great opportunity here, and one which will attract a lot of interest from publishers with minimal effort. Unless they all slope off into an apathetic stupor in the meantime. YPN is surely the lowest of low-hanging fruit for Yahoo.

So I’m pretty sure that when Jerry Yang talks about changing the game, he is talking about YPN. Anything else is a relative waste of time and would reflect a total breakdown in priorities, assuming Yahoo’s executives continue to position the company as an online advertising business.

Make it so, Yahooers.