Apogee Weblog: What Should the New Yahoo! CEO Do First?

Yahoo! CEO Terry Semel is out (via TechCrunch and Read/WriteWeb). Jerry Yang (who founded the company with David Filo) is the new CEO and Susan Decker has been promoted to Yahoo! President. If you want to catch up on that news, read the Yahoo! blog, the press release and the Techmeme coverage. No point in regurgitating the news here on this blog.

Instead, I'm going to propose some steps I think the new Yahoo! CEO should implement first. Am I qualified to advise Jerry Yang? Probably not, but I did work at AOL from 1995-2001 so know what it's like to work at a small but then large Internet company that loses its edge. Also, from an external perspective, I've managed Yahoo! Search Marketing accounts since 2002 (when it was Overture). I'll limit the scope of this post to two ideas that specifically address points made in Jerry Yang's "My new job" post:

1) Make Yahoo! Search Marketing work for Yahoo! Search only.
He stresses a "Yahoo! that better monetizes its audience." Right now, the audience that could be monetized better is searchers. This might seem counterintuitive, but if Yahoo! created a version of (or enabled an option in) their ad platform that worked exclusively for Yahoo! Search, they would monetize search results to a much better degree.

It doesn't matter that Yahoo! has a new advertising platform. It's all about ad distribution. Since they haven't been able to increase ad distribution (like Google has), they need to improve the quality of their existing ad distribution. This will attract more advertisers and those advertisers will be willing to bid higher and Yahoo! won't be paying as much TAC (traffic acquisition costs).

I explained the problem awhile ago in this post: Yahoo! has Nasty Sausage Ingredients. You'd be amazed at how much low quality traffic flows through the Yahoo! "search" advertising system. Since advertisers cannot opt out of this low quality traffic, they simply lower bids across the board in order to maintain sufficient ROI. Yahoo! loses money - and credibility. Wouldn't it make perfect sense to have the option to buy ads *just* on search.yahoo.com through Yahoo! Search Marketing? It's probably bad netiquette to quote oneself, but I think this drives the point home. In a recent post, Yahoo! Search Marketing New Pricing Model is the Wrong New Feature, I stated:

A discount on low quality traffic is still a premium.

Think about that. Say it out loud. Man, I wish Yahoo! was listening. A discount on low quality traffic is still a premium! Because of that, in many cases, I've been turning off Yahoo! Search Marketing ads entirely or cutting way back on bids and keywords, allocating that budget to Google AdWords (where I can run ads just on Google properties) and focusing on SEO tactics for search.yahoo.com results.

Do you agree that Yahoo! could actually monetize search better if they provided an option to limit ad distribution to Yahoo! Search alone?

2) Integrate Flickr and del.icio.us into Yahoo! Search
If searchers are the audience that can be monetized more effectively, then wouldn't it make sense to improve the Yahoo! Search product to attract a wider audience? This suggestion is in response to Jerry Yang's post where he says:

We have incredible assets. This company has massive potential, drive, determination and skills, and we won’t be satisfied until the external perception of Yahoo! accurately reflects that reality.

Two of the most important assets are del.icio.us and Flickr. I wouldn't worry about the "external perception" but would simply build a better search product than Google. This is not a new idea. Yahoo! has already done some Flickr search integration and I talked about del.icio.us search integration in 2006:

I think Yahoo should leverage their del.icio.us property to improve their search product. They could tack on del.icio.us results, much like they've done with answers. Better yet, they could use the collective intelligence of social bookmarking to improve their search relevance algorithm. Google's big breakthrough was... [read the full post]

Geez, quoting myself again. The other important asset that Yahoo! possesses, of course, are its people. It's clear from events like Hack Day that the developers at Yahoo! continue to innovate. Perhaps they will have more of a voice now that Yahoo! has a new CEO. Catching up on news about the recent London Hack Day, however, it did seem strange to not have a Yahoo! property to conduct a search. From the Yahoo! Developer Network blog:

(For more on the goings-on at Alexandra Palace, checkout the hackdaylondon tag in del.icio.us and Flickr)

Wouldn't it make more sense if you could just search for london hack day or hackdaylondon (on Yahoo! Search) and, if tags were present and relevant, they'd be integrated into the search results? It somehow seemed awkward to have to go to two separate Yahoo! properties to catch up on London Hack Day. Shouldn't they be integrated into Yahoo! Search? Could this type of innovation make Yahoo! Search more compelling than Google?

I did say I'd limit this post to two ideas so I won't wonder if the new Yahoo! CEO would complement Flickr and del.icio.us with a purchase of Technorati. Instead, I suggest you enjoy a game of Flickr TagMan: