What Should Yahoo! Do Next?

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Yahoo Industry ReactionYahoo!'s recent woes have been well-chronicled as display advertising performance has lagged industry averages, several talented executives have exited and now CEO Carol Bartz has been fired - to name a few "challenges."

But, plenty of assets - if not opportunity - still remain in tact for Yahoo!. So, AdExchanger.com reached out to a selection of industry leaders, including several ex-Yahoo!'s, to ask the following question:

"What should Yahoo! do next?"

Click below or scroll down for more:

Chris Copeland, CEO, GroupM Search (WPP Group)

"Yahoo’s current state doesn’t rest solely on the doings or wrong doings of former CEO Carol Bartz. She delivered what she was hired for, differentiated the engine from Google, and from day to one her final email, remained a straight-shooting, organization-tightening leader.

Yet while experts debate who the next leader of Yahoo will be, Yahoo’s board of directors faces what may be the most critical challenge in enabling a successful future for the company – reconciling what the company post-Yang, Semel and Bartz really is.  Unlike its competition, Yahoo is less about the Valley and more about Madison Avenue and Main Street. It’s become less about search and a destination where content is king. The numbers suggest Yahoo is no longer the world’s homepage – Facebook and/or Google have a more legitimate claim to being the true owners of that doorway with successful monetization of engagement both as scale and by influence.

So where does Yahoo go from here? There’s an “easy” answer and it’s sitting 850 miles north of Yahoo headquarters where Microsoft calls home. That’s not to say a Yahoo acquisition is right for Microsoft – but it’s a viable end game for Yahoo, and with the Y! under their belts, Microsoft can finally cement their position as a player in the digital age.

But if Yahoo’s seeking longevity and prosperity as a stand-alone, it seems their answer is a pre-eminent premium content play on the web. To do that properly their culture and components would need drastic attention. AOL or Hulu make for appealing acquisitions, as well as the return to a sales-driven culture that aligns with Madison Avenue. It is a digital brand many in this industry grew up with, and can be credited with developing a depth of talent profoundly peppered throughout the industry today. Whether Yahoo can return to prominence without search, mobile and social at its core remains in question, if, of course, that is the uphill challenge its new CEO is tasked with.

While speculation evolves on “the who” that will fill the open seat at Yahoo, their next move will say everything about “the what” to come for the organization."

Elizabeth Blair, CEO, Brand.net (spent over 9 years at Yahoo!)

  • "Divest Japan and China Investments Now: C-level management has spent enormous time on these in just the past few years - focus that needs to be on the core O&O business. International JVs and minority owned subs are alluring. But Yahoo! isn’t creating value for them, gets no operational benefits from them, and thus loses value absorbed in them. Chinese wall a separate banker/lawyer team to wrap them up and keep “leadership” 100% goaled on and focused on driving O&O – and thus shareholder – value.
  • Immediate 25% RIF: Two reasons: (a) Yahoo has been stagnant. That means it could get by with a lot less people. (b) Figure out what matters and what can grow. In 2000 the Bubble hit, we did the first ever Yahoo! RIF, and I had to lay off many people I’d inherited just a few weeks before. Ranks depleted, we quickly figured out what really mattered to sustain. And, quickly thereafter, what had growth potential. We built back up from a clean base of opportunities and people.
  • Consumer Product Clean Slate: It all rises and falls on delighting the consumer. Hundreds of millions of dollars are being spent with little to no apparent innovation, no sense of what Yahoo! is trying to be. The delight has left the house. So see bullet above – execute a massive RIF, sustain what exists today, pull in a half-dozen people who created “Yahoo!” as we know it and tell them: Free Reign for Round 3. A couple extraordinary folks who in 1996-1999 created “Yahoo!” as we know it from scratch. And a few of the early 2000s generation who "post Bubble" rebooted the thing. They know Yahoo!, they made Yahoo!, they love Yahoo!. Need that.
  • Reset Ads Business Fast: Search is gone. Display/Social/Etc. is really 4 pieces to me: call it Plumbing, Platform, Products, Paths. Plumbing = exchanges. Right Media was Yahoo!’s shot, and it’s gone. This Yahoo!-Microsoft-AOL ”Remnant” Consortium is a variation of the same mistake. Demand, not supply, is always the bigger play. And, to the extent a “supply aggregation” opportunity did exist – others grabbed it while Yahoo! drifted. Time and platform development cycles here destroy Yahoo!’s chance to move quickly to where it historically shone and still has a big play: demand. And go there with enthusiasm. Remember, Goldman Sachs doesn’t own the NYSE Euronext or NASDAQ OMX, but is worth more than the two combined. Because Goldman mastered the art of demand. It built a Platform – sophisticated proprietary technology that rides atop the exchanges, perfectly tuned to maximize value in trading bonds, stocks, commodities. And Products – market-centric bundling of the differentiated capabilities that Platform provides. With Search and DR effectively picked off – Yahoo!’s play is to build platform and products to help megabrands move their “30 second spot” broad reach media into digital, smartly and with scale. Finally Paths – channels – to get the right products to the right customers. Goldman has mastered the multi-channel strategy: Hedge Funds, CFOs of industry or municipalities, High Net Worth individuals. Yahoo! still has great relationships in the two key channels: agency and client direct. Get back to them.

If all four can get moving ASAP, Yahoo! in 12 months is a very different, very much more valuable Yahoo!"

Bill Wise, CEO, MediaBank (Joined Yahoo! with Right Media Exchange acquisition in 2007 and left to run MediaBank in 2010)

"Having worked at both DoubleClick and Yahoo, I can tell you there are some striking similarities here... Before Hellman & Friedman took them private, DoubleClick had a TON of amazing assets-- but many of them were under-leveraged and undervalued. On top of that, DoubleClick's acquisition strategy in the years leading up failed to create a cohesive and fully integrated product suite, much like Yahoo's various adtech acquisitions, Asian assets, and video assets. Private equity came into DoubleClick, sold off email, sold off Abacus/ data, sold off research, massively pruned it's employee base and focused on it's core-- ad serving. Then, it built it right back up with Performics, AdX exchange, rich media, etc. All of these moves, while painful to go through, were critical to the eventual success and sale to Google. Yahoo is in exact same boat-- so what is the purple Y's core? It's premium digital content at scale. Yahoo is the largest digital publisher and has the most marketable inventory for advertisers. It needs to strip itself of non-core assets, cut a painfully large amount of if it's staff (maybe 35%), and embrace being the largest digital media player in the marketplace... And not feeling the need to own the underlying adtech in the marketplace- they won't be able to compete with Google, Microsoft in an adtech battle."

Gurbaksh Chahal, CEO, RadiumOne (Yahoo! acquired Chahal's Blue Lithium ad network in 2007)

"First and foremost, Yahoo is great global brand. I still use it daily; among the 600 million global users. It has some amazing products. But, what’s missing now is its vision and innovation around it. Rumors have swirled. But, AOL is not the answer. And, striking a deal with AOL and MSN for excess inventory is also not the answer. These are all largely short-term moves without a long-term goal.

Vision coincides with innovation. And if you bring innovation back into the DNA of Yahoo employees – it can create a “bleed purple” culture back into the spirit of Yahoo. Just look at the prime example of how Steve Jobs did it with Apple. Steve Jobs resurrected Apple from the dead and made it a leader. Yahoo is clearly far from dead and is in much better position.

When you look at some of the core assets (search, mail, homepage, messenger, etc.) its quite amazing how much engagement they still have in these products. The data around these assets is also amazing. When I sold BlueLithium to Yahoo I gave a presentation of 20 ideas they could integrate into their assets to make them more social. Unfortunately, the leadership changed and nothing was done. Today, more than ever its about innovation. How can you connect with these 600 million users socially? How can you build advertiser products that have social signals that advertisers want to see? These are just two of the big questions they can start answering to start “winning” again in the marketplace. That will only happen if the culture can manifest innovation again. The good news is, the race is not over yet."

Barry Lowenthal, President, The Media Kitchen (MDC Partners)

"Yahoo should focus on what it does well, or fairly well, and that's email. It's not content. It's email.

I've been a long time Yahoo email subscriber. Member since the beginning. When Yahoo first launched I loved the directory functionality. Everyone did. But Google obliterated that business. It also obliterated Yahoo's search business.

Yahoo also tried to get into the original content business a few years ago, but did not have measurable success. Monster is a great biz and so is finance, but original content didn¹t fair so well.

Yet much more than 100MM people in the US visit Yahoo every month. That's super powerful. Even though there's a lot more interesting content online and easier ways to find interesting content a heck of lot of people still go to Yahoo on a monthly basis. Many of those people go to check their email. Even though there are nicer (and cheaper) ways to get email, Yahoo still has a very big email business. An email address is a very sticky asset and there's a lot of room for them to leverage it. They should focus on what they do really well and invest in building the single best email business on the web. Then they should buy Blackberry.

Blackberry is a great email device. It's also a really good phone. Combing Yahoo's user base and email list with Blackberry's mobile technology and email platform would be a really interesting coupling."

Russell Fradin, CEO & Co-Founder, Dynamic Signal

"Yahoo needs to realize they are not ever going to become an innovative Silicon Valley tech company. They haven't been since the mid-90s. They are a great content company. They need to focus on ad sales and content creation. Their sports activities are amazing. They need to revamp finance, health, etc... and just be a giant, super-successful content company that makes a lot of money. They SHOULD NOT go on an M&A spree. Name me one company EVER who turned themselves from a content company into a high-growth, super-successful tech company by taking the shareholder's cash and buying new companies. Doesn't happen.

Once their ad sales are rolling and their content creation is back on a high growth track, then they can do tuck-in acquisitions. Buying Mashable, Business Insider, Politico, things like that could make sense.

Once Yahoo has things back on track on the content / media sales side they should move their headquarters to Chicago, or Reston, or Atlanta, anywhere outside SV. Yahoo makes a TON of money, it is a vitally important media property, and it has continually been mismanaged in part because of the insane notion that they could have been or still could become Google. That's just not what they are. If they were based somewhere else they'd just be a giant, growing media company and we'd all be fine with them."

By John Ebbert

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