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Apr 23, 2008

NEWS: Yahoo’s Starting Point: A Clearer Strategy

Yahoo’s Starting Point: A Clearer Strategy
New York Times - United States

Many traditional media companies worry that the rise of advertising networks is undercutting their prices and turning their precious advertising space into ...

The “Starting Point” idea, as Ms. Decker explained it, implies two breaks from Yahoo’s past. First, instead of spreading the peanut butter of its efforts across hundreds of sites, it will devote the bulk of its resources to the handful of sections that get the most traffic: the home page, search, news, e-mail and a few others.

Second, the measure of success becomes how often users visit, not how long they stay. That encourages the company’s product designers to be more liberal in linking to other sites and opening Yahoo’s interface to a variety of outside applications and partnerships. You can see some of that in Yahoo Buzz, its Digg-like news site, which often provides links to other sites on Yahoo’s home page.

“When we think of ourselves as a starting point, rather than a destination, all of us become more focused on simplifying users’ lives,” she said.

This openness, of course, is a response to the power of Google; not just search, but Google News and iGoogle, all of which are a model of starting points with little effort to link to Google properties.

Ms. Decker articulated Yahoo’s approach to weaving social features throughout its site.

“We are not trying to be another social network,” she said. “Rather, by linking users’ favorite destinations and content, with their friends’ families and communities, we can deliver better relevance on a scale that no one else has achieved.”

Yahoo has been talking about variations of this strategy since the fall, and yet we still haven’t really seen any significant result.

As for Yahoo’s advertising strategy, Ms. Decker started referring to the company’s focus on “premium partners,” by which she meant newspapers and other media companies, like Forbes, with whom the company is aligning. She didn’t say as much, but this seems like a sensible way to contrast Yahoo’s advertising network with those of Google and AOL, both of which work with the broadest range of publishers, big and small.

Many traditional media companies worry that the rise of advertising networks is undercutting their prices and turning their precious advertising space into a commodity to be traded like pork bellies. There may well be an opportunity for Yahoo to define itself as the ad network that is especially friendly to mainstream media.

Of course, Yahoo is not in reality keeping the online ad world limited to the old country club set. It owns the Blue Lithium ad network, and the Right Media exchange, which is the most active pork-belly pit for cheap online ads.

But at least Yahoo can say to publishers that it feels their pain. The rise of cheap “non-guaranteed” advertising space has dragged down Yahoo’s revenue, Ms. Decker said.

I wonder if there is a bit of a conflict between these two strategies. Can Yahoo really be the most open starting point for Web users if it also wants to help bolster old-guard companies. You can already see that in the new Yahoo Buzz. Unlike Digg, where users submit stories for other people to vote on, Buzz offers its users the chance to express opinions about stories from a handpicked list of about 100 publishers.

It’s true that limiting its starting point to sites with which it has business deals will “simplify users’ lives,” although I’m not so sure that sort of simplification will win a lot of converts from Google.

But Yahoo clearly will benefit, because Ms. Decker is simplifying and clarifying her description of what she wants the company to do.

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