Yahoo! Is Now All About "Focus"

  |  November 15, 2001   |  Comments

UPDATE: Company fires 400 employees in restructuring. New strategy includes charging for more services and less "attitude."

Yahoo Thursday outlined its new business strategy to the joy of analysts who say it was about time that the Internet's most traveled site grew up.

In a day full of presentations by Yahoo top brass, CEO Terry Semel pled his case in front of analysts, investors and the media saying that the company's future will be founded on a deeper "focus."

"Focus is the new keyword to our company," says Semel. "We're not going to change the face of Yahoo but there are things that we can do increase our revenue and become a partner of choice."

This is the first time in the six months since Semel took over the company that Yahoo has even talked openly about its long-term strategy.

"I could have opted to do this in Internet time, but we decided to really take a hard look at the direction we wanted to go," says Semel. "This is kinda like a coming out party for us."

However, the party will not include some 400 employees, which the company said it would layoff earlier this quarter. The cuts are part of the company's plan for profitability. Yahoo president Jeff Mallett says the layoffs will come mostly from its international and broadcast divisions as well as some middle management.

Semel says the Santa Clara, Calif.-based media company is in more of an evolution than a revolution with more focus being placed on diversifying the things that will make Yahoo money.

Focus On Cooperation

Part of Yahoo's new plan includes a decreased dependency on advertising revenue. Since Semel took office, the company has shifted from a near 100 percent addiction to advertising to 76 percent in ad dollars, 20 percent in business and customer fees and 4 percent in transaction fees.

"My goal is to have a 50-50 balance by 2004," says Semel. That would be 50 percent focused on advertising and 50 percent on all other revenue.

Other changes include a shift in the company's focus on its business customers. Unlike the other two major portals - Microsoft's MSN and AOL - Yahoo says it is not confined by partnerships.

The company is hoping to establish more cooperative relationships with their business partners.

"Customers are in - my way or the highway is out," says Yahoo chief advertising sales officer Wenda Millard.

The streamlining of the business units includes paring down 44 divisions into six separate units: Listings, Access, Media & Info, Enterprise Solutions, Commerce and Communications.

Semel and other execs have also pointed to a continued outsourcing for things that are beyond Yahoo's expertise. The company says it has cash reserves that it is even considering using in future acquisitions.

Where Has All The Free Stuff Gone?

Part of the solution to Yahoo's coming of age will depend on charging for things that used to be free.

The company says it is committed to free sections of its site, but ever so slowly more content and services are coming with price tags attached.

Yahoo has already been charging for its GeoCities Pro and GeoCities Webmaster, parts of its Yahoo Personals as well as the advanced version of its Yahoo Messenger service. The company even began asking for user fees for its auction site. All had been previously free.

Other money making schemes include new partnerships announced Wednesday with SBC and Overture. Both joint ventures are expected keep the money flowing into Yahoo coffers.

The company says it will also eliminate some of its services that don't fit into its new revenue plans.

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ABOUT THE AUTHOR

Adam Posman

Adam Posman is a strategic planner with BAM Strategy, a leading digital agency with offices in Montreal and Toronto. BAM's core services include strategic planning, media buying, creative production, online contests, email marketing, and customized marketing technologies.

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