Sunday, May 26, 2013

Can Yahoo re-invent itself?

Rewind to 1999, a year when I was just starting my career as a researcher. I was doing my very first piece of digital research - understanding Indian internet users, at a stage when usage was gradually becoming wide scale. 

Believe it or not, in those days, we had PCs in office, but they did not have an internet connection! And I used to go to the cyber cafe around the corner on weekends to pass a couple of hours. It's hard for me to believe that such an existence was possible. Actually, I remember being quite happy, sociable and active. But I digress.

So I was talking about doing research among internet users and the name of one portal was on everyone's lips - Yahoo. Yahoo was the gateway to the internet for literally every first time user that we spoke to. And the very first action of a first time internet user (often with a friend perched on a stool next to him at the cyber cafe) was to create a Yahoo! Mail account. It was the go-to sites for jokes (and was responsible for all the mail forwards that troubled us for many years hence). It was the premier search portal. It was the place to pass time playing games. And Yahoo! Messenger was the definitive way that Indians chatted, flirted with strangers or courted future spouses. 

Those were the days when portals were big business. Yahoo, MSN, Rediff, Indya.com, all aspired to be the sticky honey-trap that held the attention of a new generation exploring the wonders of the internet. 

Fast forward to the last few years when Yahoo has been reduced to a spectre of its former glory and has been fighting to survive. Here is the reason why, in one line - Yahoo derived revenue from monetising the vast user base it attracted for its content, but missed the entire mobile revolution. Android has been Google's investment in keeping a user base on mobile and eventually serving them content, search, ads and other applications. Yahoo had no equivalent platform, and until recently, it had precious few mobile applications offering a decent user experience. 

The biggest example of Yahoo's failure to catch the mobile revolution is Flickr. The desktop oriented, real estate grabbing photo site lost out on the entire trend of mobile photography and social photo sharing which was seized by Instagram. 

To add to Yahoo's problems, it's not even relevant any more as a desktop offering. The age of specialisation and fragmentation has made the portal concept obsolete. We no longer seek 'everything under one roof'. We go to a search engine for search, a YouTube or Vimeo for video, a Netflix for video streaming and so on. There is no particular reason to visit a Yahoo any more.

But the winds of change have been blowing at Yahoo ever since Marissa Mayer, ex-Google executive, took over the company. She has made her ambition and intent for Yahoo clear, right from the beginning - she wants to make Yahoo! a part of people's everyday lives. She did a basic exercise - she created a list of people's daily routine, and the tasks they performed on their phones, and then she set out to deliver content based on these daily habits. 

But she also recognises that in the mobile context, merely serving content is not enough. Mayer defines the core of the Yahoo offering as personalising of content, for mobile and desktop. Obviously, this also leads back to better user profiling, and therefore, advertising revenue. 

And she has been about actions, not just words. Here are some of the actions

1. Pruning of Yahoo's vast portfolio of 70 mobile apps down to 10-15 core apps. This is WIP but it has already started. Paired with re-design of many apps notably mail and Flickr, Yahoo is striving to improve the mobile user experience. With 200 million monthly users on mobile, Yahoo's mobile strategy is going to be extremely important.

2. A non-exclusive partnership with Google to run Google Ads on the Yahoo network. At one point, Mayer was  in charge of the Ad Words product at Google and the alliance with her ex-employer will be beneficial to both companies, as Yahoo stands to gain its share from users clicking on contextual advertising.

3. Yahoo may be too big (or too old!) to do disruptive innovation, so it has gone the acquisition route to bring in the fresh thinking. Summly, a news aggregation app was acquired for $30 million, and more recently, Tumblr was acquired for 1 billion USD. In the case of Tumblr, the lure was clearly the 84 million users of the social blogging platform who represent a potential source of ad revenue.

4. Yahoo has also come into the business of making offers you cannot refuse. At least, I hope they continue the trend, but the specific offer I am referring to is Flickr. 1 TB of photo storage is not just generous - it's insane and it is audacious enough to lure users back. Already Picasa looks feeble. Paired with a superb mobile app and sharing capability through mobile, Flickr is already seeing 25% increased usage. This is really a great example of cross-pollination of the mobile, desktop and cloud to create an irresistible offering for users. If Yahoo has more of such offers, then their worries can start receding a bit. 

It will be exciting to see  the route that Yahoo takes, and how they gain back presence and usership in the market. 

Sources : MashableZDNetTechI