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5 Questions That Yahoo's New CEO Must Address

  |  February 6, 2012   |  Comments

The company's success hinges on Scott Thompson's answers to these questions.

Four weeks and an earnings call later, we still have little insight into Scott Thompson's Yahoo. We know it does not involve a board with co-founder Jerry Yang on it and that he sees a need for greater speed and balance in the organization. Beyond that, Mr. Thompson remains reserved in putting a full vision into the market.

With the planning still under development, there are five clear areas that must be addressed by Mr. Thompson and the new Yahoo:

1. What is Yahoo?

Immediately upon Carol Bartz's firing, two camps emerged around the future of Yahoo: those who believe it is a tech company and has to continue to invest in its stack in an all-out battle against Google and others, and those who believe it is a media company with a future in content. On Yahoo's conference call with Mr. Thompson announcing his appointment, Mr. Thompson said, "Yahoo's core business is creating great experiences for users." He said it is a company that should have "excellent technology and content, not one or the other." No Internet company has been better at being a jack-of-all-trades, but master of none, than Yahoo. Can the same company that had to get out of search tech really afford to do both tech and content?

2. What to do with Alibaba?

If Yahoo is going to try and do tech and content - and do them both well - then it needs more in its war chest. This points to an obvious answer to the question of what to do with its stake in Alibaba. Jack Ma and Alibaba remain interested in taking the stake back. A late 2011 report from Forbes placed the valuation as high as $17 billion, which certainly gives Mr. Thompson the flexibility to reshape Yahoo. Given past attempts have been reportedly strained by Ms. Bartz's tact, new leadership may be a boon to the prospects for a sale finally happening. Ken Sena, an analyst at Evercore Partners in New York who has an "equal weight" rating on Yahoo, suggested that "Scott (Thompson) has a great track record in payments and has proven an effective executive at PayPal and has major tech chops and international experience." That international experience is clearly a plus in this area.

3. How can Yahoo play catch-up in mobile and social?

Mr. Thompson correctly acknowledges that there is work to be done at the company. Yahoo has aggressively added its own social layer in recent months with the launches of Livestand, a tablet app designed to provide personalized content in a singular experience, and IntoNow, a social app built around shared TV experiences. This idea of building on top of the social graph and on existing platforms vs. creating a standalone product feels appropriate for Yahoo today. Mr. Thompson would be wise to leverage the power of Yahoo's 700 million users to further cozy up to Facebook with such apps. In mobile, while acknowledging a gap in position in the market, Mr. Thompson said, "We will be great across all devices. When they want some piece of information, the Yahoo experience will be the first place they go."

4. How does Yahoo's primary revenue business - display advertising - fit into the strategy?

For the last decade, Yahoo has consistently touted the potential of its user data. In terms of scale and depth, few non-governmental organizations can match the breadth of consumer intent and interest that Yahoo can. Mr. Thompson, like every Yahoo CEO before him, indicated that he felt the ability to innovate will come from analyzing the data. It is a daunting task, but a necessary one if Yahoo is to better monetize its inventory and deliver meaningful connection opportunities to advertisers. As it pertains to the Yahoo display business, Mr. Thompson said on the heels of being appointed to his new role, "It's too early for me to have any informed opinion on the display space and what's happening there and what's happening next." This statement will give many great pause as a new CEO with no opinion on a core business is curious, to say the least. On the topic of display advertising, it is absolutely necessary to give Mr. Thompson the benefit of the doubt and time to assess what exists and how to use his experience from PayPal toward better optimization of the inventory and sales force for the collective good.

5. How does Yahoo become a hot destination again?

No, not for consumers, but rather, how does Yahoo in a hot Silicon Valley market with Google, Facebook, Apple, and emerging IPO opportunities at every turn become a desired destination for talent? There was a time when the Yahoo "Purple People" culture was real and tangible. The digital industry still roots for Yahoo to get it right, but there's a clear challenge ahead in retaining top talent. Symbolically for the market, this likely starts with Blake Irving and Ross Levinsohn; but as reported in AllThingsD, the issues go much deeper. In an annual survey taken in Fall 2011 and shortly after the departure of Ms. Bartz, nearly 20 percent of all Yahoo employees said they expected to leave within the next year and 31 percent disagreed with the notion that Yahoo is innovative. This is problematic since Mr. Thompson indicated that Yahoo is and should be a technology company with "disruption" and "innovation" at its core.

Less than four years ago the company was offered north of $30 per share in Microsoft's final acquisition attempt. Since that time, the stock has fallen sharply, trading in the low teens for most of the past two years, while the search engine that once led the industry has desperately tried to redefine itself as it was forced out of the search technology business. Unspoken here is the role the Yahoo's board of directors has played in allowing Yahoo to reach this place. With Mr. Yang's departure and rumor of even more moves, it may truly be a new day for Yahoo; whether it returns the exclamation point to the Internet giant remains to be seen.

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ABOUT THE AUTHOR

Chris Copeland

Chris Copeland is chief executive officer of GroupM Next, the forward-looking media innovation unit of GroupM. Chris is responsible for curating and communicating insight-focused media solutions across established and emerging platforms. Leveraging his multi-year experience with emerging media companies, Chris is tasked with stewarding GroupM Next in partnership with agency leadership from GroupM's four media marketing and marketing service agencies (Maxus, MEC, MediaCom, and Mindshare). The focus is participating with those companies leading changes that most impact consumer media consumption, brand favorability, and purchase behavior.

Guiding the Predictive Insights, Technology, Research, and Communications teams at GroupM Next, Chris is responsible for overseeing the amplification of insights into opportunities that directly benefit the business of GroupM agencies and their clients. GroupM is the world's largest media investment management group and the media holding arm of WPP. Together, GroupM agencies represent almost $30 billion in overall North American billings (RECMA).

Chris helped guide the development of GroupM Next, which was established to deliver the best thinking and new insights from within the GroupM community. The unit also focuses on technology innovation connecting all media channels, but especially, online, social, mobile, and addressable.

Chris was selected to lead GroupM Next after nine years of leading the search marketing practice within GroupM. Among his accomplishments are the development and integration of the global search marketing offering for GroupM agencies, GroupM Search, which managed $1.3 billion in search billings globally and grew to more than 1,000 search marketing strategists serving 40 countries. In 2009, Chris created the research division of GroupM Search and developed research studies that deepened the understanding of consumer behavior across search and social media for leading brands and garnered global traction - most notably: The Influenced: Social Media, Search, and the Interplay of Consideration and Consumption; The Virtuous Circle: The Role of Social Media in the Purchase Pathway;and From Intent to In-Store: Search's Role in the New Retail Shopper Profile.

Chris entered the digital industry in 1996 when he joined search marketing agency WGI (later acquired by Tempus Group). He has been with the WPP and GroupM family of companies since 2000 when, recognizing search as an emerging media channel with incredible potential for brands, WPP acquired Tempus Group and CIA, and ultimately rebranded the search marketing agency as Outrider. As senior partner and managing director of Outrider, Chris delivered on GroupM's vision for the channel, leading the organization to 500 percent growth with global presence over five years, and establishing award-winning search marketing strategies that have become industry-wide best practices. In 2002, Chris successfully implemented the integration of search into the cross-channel media planning process at MEC, creating the first search marketing practice to sit within a media communications and planning company. In 2007, he guided the business expansion of search marketing practices into all GroupM agencies. In 2009, Chris was named CEO of GroupM Search, where he was responsible for driving global search strategy for the organization, while fostering the innovative application of search as an integrated channel. In his role, Chris also provided digital strategy counsel for clients, including AT&T, Dell, Audi, Volkswagen, and more.

Chris is an active member on advisory boards at the 4A's, Google, Yahoo, MSN, and I-COM. He is a frequent speaker in global forums discussing the digital marketplace and how the space is evolving, and serves as a regular resource to national and industry press. Chris contributes editorial commentary regularly to Advertising Age, ClickZ, MediaPost, and MediaBizBloggers.com. In fall 2013, Chris was honored as an inductee into the ClickZ Digital Hall of Fame.

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