Job One For Yahoo CEO Marissa Mayer: The Vision Thing

Marissa Mayer

Marissa Mayer (Photo credit: jdlasica)

Cross-posted from my Forbes.com blog The New Persuaders:

Everybody has all kinds of advice for Yahoo’s new CEO, Marissa MayerHire great engineers. (Well, duh, but how? Big money alone won’t do it.)  Fire 10,000 people. (Sure, Marc, easy peasy–that should help with recruiting too.) Fix Flickr. (Right, and 47 other services while you’re at it.) Go mobile. (Years late, that should work.)

Granted, most of those things may well be necessary at some point, and probably soon. But here’s what everyone from employees and advertisers to users and investors needs to know first: What is Yahoo?

It’s a question that has produced unconvincing answers for so many years it’s hard to remember by now what made Yahoo unique. Yahoo itself takes a direct crack at it on its “Investors FAQs” page, answering the very same question, “What is Yahoo!?”:

“Today, Yahoo! Inc. has become the world’s largest global online network of integrated services with more than 500 million users worldwide.”

Ugh. “Digital media company”? Makes my heart, uh, flatline.

It also has an actual “mission or vision statement,” a clear carryover from Carol Bartz, two CEOs ago:

“Yahoo! is the premier digital media company. Yahoo! creates deeply personal digital experiences that keep more than half a billion people connected to what matters most to them, across devices and around the globe. That’s how we deliver your world, your way. And Yahoo!’s unique combination of Science + Art + Scale connects advertisers to the consumers who build their businesses.”

A little better, but really, “Science + Art + Scale”? Hard to imagine that means much to advertisers, let alone consumers. (I was always surprised Bartz didn’t call it Art + Science + Scale to provide a more characteristically salty acronym.)

Still, there’s a kernel of something in the part about keeping people connected to what matters to them. I will hazard an unpopular view that Yahoo’s original mission as a portal still has fundamental appeal to many people. Most digerati will say the portal is dead, and good riddance, as people flock to more focused services such as Facebook’s social network and Google’s search engine. So if Yahoo comes out and says it’s a portal, it will become even more of a laughingstock in the tech community.

But even Google and Facebook increasingly are becoming hubs for all kinds of activities, even if they will never utter the P word. So it seems clear that a very large number of people out there want someone else to help them decide the best services and apps to use online–and provide a way for them to work together and share data in ways that are useful to us, not just advertisers. It’s also clear that many people are leery, thanks to privacy concerns or simply because they may miss the latest and greatest from that new upstart, about going all-in on Google or Facebook or even Apple.

At its heart, Yahoo’s value, when it has had value, is providing people easy, curated access to the best online services out there, whether they’re Yahoo’s own or others’. That’s a media company, however that’s evolving today and will continue to evolve in the future.

Of course, a vision only works if you act on it, so ultimately, what will really matter is creating new services people can’t live without. Those are now few and far between at Yahoo, though a few like Sports and Finance come pretty close. Spurring the creation and execution of new ones is where Mayer could shine where her predecessors did not.

But Mayer’s vision needs to acknowledge that Yahoo’s future can’t simply rest on pumping out cool products. It needs to be more meta than that in an era when only a couple behemoths can even think about providing everything on their own (and even Google has throttled back its habit of throwing stuff against the wall to see what sticks). And dozens of smaller companies are providing best-of-breed services that Yahoo will be hard-pressed to compete with.

The way Yahoo becomes a 21st century media company, a concierge of online services, needs to be fundamentally redesigned for the mobile era, of course. I still use MyYahoo a lot because I’ve populated it with stock lists, key news sources, access to email accounts, quick views into other services such as Twitter and Facebook, and more. But the desktop version is a fright on my mobile phone, and the mobile version is simply a long list of seemingly random feeds.

Yahoo, of all companies–the one that famously kept its home page simple enough early on that it wouldn’t take more than a few seconds to load on slow dial-up connections–should be able to figure this out. Even Apple, with the random scattering of apps across multiple pages on its iPhone, hasn’t figured it out. But I’d love to see it, and I and a few hundred million other people wouldn’t mind getting it from Yahoo.

For her part, Mayer provided a provisional vision of what Yahoo is or should be to the New York Times: “My focus at Google has been to deliver great end-user experiences, to delight and inspire our end users. That is what I plan to do at Yahoo, give the end user something valuable and delightful that makes them want to come to Yahoo every day.”

But that “something” is far too diffuse, and surely she knows that. As a former product chief at Google, Mayer may face a challenge doing the vision thing. She needs an elevator pitch, yes, but more than that: She must make a clear, bold statement of why we should continue to type Y-a-h-o-o into our browsers, or install Yahoo apps on our smartphones.

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Move Over, PayPal Mafia. Meet The Google Mafia

From my Forbes.com blog The New Persuaders:

PayPal, the online payments company that eBay bought in 2002, is legendary in Silicon Valley for spawning an incredibly talented group of founders, investors, and executives at startups that read like a Who’s Who of Web success stories. The so-called PayPal Mafia includes Tesla and SpaceX founder Elon Musk, LinkedIn cofounder, angel investor and Greylock VC partner Reid Hoffman, hedge fund and early-stage investor Peter Thiel, Yelp cofounder and CEO Jeremy Stoppelman, YouTube cofounders Chad Hurley and Steve Chen, and many more.

Now, it looks like a new corporate organization is moving in: the Google Mafia. With the surprise appointment today of longtime Google executive Marissa Mayer as CEO of Yahoo, it now appears that the Google Mafia could prove almost as powerful, though in a different way: It’s more of an executive mafia than a startup mafia. But these former Googlers are now in high-profile positions around the Valley and the larger tech industry, in very influential companies. …

Read the complete post at The New Persuaders.

What Google Veteran Marissa Mayer Can Do As Yahoo’s New CEO

Marissa Mayer

Marissa Mayer (Photo credit: Wikipedia)

From my Forbes.com blog The New Persuaders:

In a surprise move widely viewed as a coup, struggling Yahoo has just appointed Marissa Mayer, a highly visible longtime executive at Google, to be its new chief executive. The appointment, initially announced through a New York Times story, now has been announced officially.

Mayer, who for years ran Google’s search products after joining as employee No. 20 13 years ago, more recently had moved to head its local business efforts. But last year, Jeff Huber was appointed senior VP of local and commerce, seemingly a management level above Mayer, though Google tried to say the move wasn’t a demotion.

Mayer, 37, wasn’t mentioned as a possible Yahoo CEO successor to Scott Thompson, ousted in May after revelations about a falsified resume. Instead, it was becoming more likely that interim CEO Ross Levinsohn would step up to the permanent post, if any CEO job at Yahoo, which has run through multiple CEOs in recent years, can be said to be permanent. On the other hand, delays in the decision indicated the board wasn’t going with the seemingly easy choice.

In an interview with Andrew Ross Sorkin of the New York Times’ Dealbook column, Mayer said that despite “an amazing time at Google” for the last 13 years, the decision to take the top spot at Yahoo was “relatively easy” because it’s “one of the best brands on the Internet.”

The job will be a big challenge for Mayer, as it would be for anyone, because Yahoo has been losing ground on virtually every measure, with sales flat or down for years. What’s more, there has been a steady exodus of talent as Yahoo changed direction and leadership multiple times in recent years and laid off thousands of workers.

Mayer faces an additional challenge because she has never run a company, let alone a large one that’s essentially fighting for its life vs. runaway competitors such as Google, Facebook, and even Twitter. Even more important, perhaps, though she was apparently moved over to Google’s local efforts to revive them, she hasn’t faced a true turnaround situation before. She could face a skeptical reception from investors, analysts, and especially Yahoo employees, who have seen two other outsider CEOs, Thompson and Carol Bartz, depart without making any headway. …

On paper, a charismatic product chief from the company largely responsible for Yahoo’s decline as an online advertising powerhouse looks like just what the Web pioneer needs. But her success now will depend not on what she has done in the past at the world’s most successful Internet company but what she can do next at the least successful one.

Read the complete post at The New Persuaders.

Yahoo, Facebook Kiss And Make Up, Ending Crazy Patent War

From my Forbes.com blog The New Persuaders:

Ending one of the more bizarre spats in Silicon Valley lately, Yahoo and Facebook have settled their patent disputeYahoo had sued Facebook back in March, alleging the social network infringed on 10 Yahoo patents concerning advertising and social networking itself.

The suit had turned much of Silicon Valley against Yahoo, since the suit seemed so clearly timed to force soon-to-go-public Facebook into coughing up a big cash or stock settlement. But the move backfired, as Facebook then not only spent big bucks to buy its own patent trove, it countersued Yahoo. Not long afterward, Yahoo’s then-CEO Scott Thompson, whom some has said was a driver of the suit, left under a cloud thanks to apparent doctoring of his resume. In early June, negotiations began between the two companies to end the fight.

How dumb an idea was Yahoo’s decision to sue one of the most powerful and influential companies in technology today, one that had been a partner up to then? So dumb that the settlement doesn’t include monetary considerations to Yahoo at all, beyond a vague promise to work together more closely in the future….

Read the complete post at The New Persuaders.

The $6.3 Billion Dud: Will Microsoft Ever Master The Online Ad Business?

From my Forbes.com blog The New Persuaders:

Microsoft just wrote off nearly all of the $6.3 billion it paid for online advertising technology firm aQuantive back in 2007. It’s an admission that the purchase, even more expensive at the time than it seems today, hasn’t worked out well–and a stark acknowledgment that its online ad business continues to lag the fast growth of Google and a couple of generations of Internet startups.

In a release, Microsoft essentially concedes that virtually all of the value, or $6.2 billion, of that $6.3 billion acquisition has been “impaired,” in the dry language of accounting. “While the aQuantive acquisition continues to provide tools for Microsoft’s online advertising efforts, the acquisition did not accelerate growth to the degree anticipated, contributing to the write down,” Microsoft said in the statement. “While the Online Services Division business has been improving, the company’s expectations for future growth and profitability are lower than previous estimates.”

Since expectations on the outside for the perennially money-losing division already were low, that’s a pretty grim admission–one that belies its recent hopes for a resurgence. …

Read the complete post at The New Persuaders.

Google Makes Renewed Grab for the Rest of Online Advertising

New DoubleClick ad system heats up battle to create an operating system for digital marketing

Cross-posted from my Forbes.com blog The New Persuaders:

It wasn’t supposed to be this way. Hundreds of well-funded online ad technology companies have sprouted up in recent years, each aiming to make it easier and more efficient for marketers to reach just the target audience they want.

Terence Kawaja, CEO of boutique investment bank Luma Partners, created this now-famous Display Lumascape to show how complex the online ad tech industry has become.

Yet the result is a crazy quilt of companies–graphically illustrated in that mess of a chart on the right–that drives marketers and agencies crazy. The very existence of so many competing products, in fact, has made placing ads online and measuring their impact more complicated and cumbersome than ever. “Venture capital has supported and financed a bunch of chaos,” advertising veteran Randall Rothenberg, CEO of the trade group Interactive Advertising Bureaugriped at a recent ad conference.

The result: Most ad dollars, nearly $200 billion a year, still get spent on television because it’s so much easier.

That’s the problem Google aims to solve with a revamped ad buying system it will announce today at a private Future of Advertising event hosted by its DoubleClick display-ad management and technology unit. (Part of the event will be livestreamed here.) The company, which already dominates 60% of the online ad business–those little text ads that appear on the right and top of the page when you do a search–now has its sights set on the remaining 40% of the industry. That would be the $25 billion worldwide market for display ads, the graphical and video banners familiar on virtually every commercial website.

Google’s goal: Provide the leading one-stop shop for advertisers and publishers to buy ads on websites, mobile phones, social networks, apps, and whatever other new media the Internet spawns. Essentially, it’s building an operating system for ads much like Microsoft did with its Windows for PCs–with much the same appeal to marketers and agencies as Windows has for PC users. “When you’re putting together a campaign, you want everything connected vs. trying to piece it all together,” says Kurt Unkel, president of the online ad buying operation at Publicis Groupe’s VivaKi digital ad agency, a Google partner.

Google’s announcement is the latest salvo in a war to control the next era of digital marketing. After a decade in which Google’s search ads overtook display ads with an unmatched ability to turn clicks directly into sales, many advertisers and publishers expect–or at least hope for–a resurgence of new kinds of display ads that could woo brand advertising dollars from TV. Neal Mohan, Google’s vice president of display advertising products, has predicted that display will be a $200 billion industry in a few years.

Read the rest of the story at The New Persuaders.

What’s Coming in Internet Advertising: 12 Predictions for 2012

I did my annual predictions first on my Forbes blog, The New Persuaders, since they’re focused largely on the Internet media and advertising I cover there. On that blog, they’re done as separate posts, but I wanted to gather them up in one place here, as I’ve done in previous years. So here’s what I think will happen (or in some cases, not happen) this year in my corner of the technology and startup world:

Facebook goes public, but won’t start an IPO landslide: Facebook will make the signature stock offering of the decade, one that reportedly will value the social network at up to $100 billion. But it won’t launch a thousand IPOs as a gazillion venture capitalists and angel investors hope.

Of course, the first part of that prediction is a gimme. But I can’t go without mentioning it because the Facebook IPO will be one of the biggest stories of 2012. Assuming Goldman Sachs or Morgan Stanley don’t stumble in pricing and selling the offering, Facebook’s IPO will be every bit as important as Google’s in 2004. It will be a sign that Facebook is a real, sustainable company (if there was any doubt left by now), but also a sign that social networking is getting woven into the fabric of our entire online experience.

The second part of the prediction depends less on how the Facebook IPO goes than on how (or whether) the economy recovers. If the recover remains slow to nonexistent and the stock market reflects that, IPOs will be sparse. If we get the slow but growing economic improvement we seem to be seeing now, more companies will go public but not a gusher. But the point is that Facebook is such a singular success that it’s not going to set the tone for lesser (often far lesser) Internet companies.

Facebook’s ad business booms–but not at Google’s expense: Facebook’s social advertising looks promising, but won’t come close to challenging Google’s huge success in search ads this year–maybe ever.

Obviously, Facebook is having no problem raking in the bucks from advertisers eager to reach its 800 million-plus audience–or more specifically, the millions of people in whatever target markets they choose. EMarketer reckons the company will gross nearly $6 billion in ad revenues this year, up from $4 billion in 2011. And that’s before we know anything about Facebook’s likely plans for mobile ads or an ad network a la Google’s AdSense that would spread its ads around the Web.

From reading a lot of articlesyou’d think Facebook is stealing all that money directly from Google. That’s not mainly the case, given Google’s own considerable growth in display advertising, though Facebook’s success may well blunt that growth in the future. Instead, Facebook currently is eating Yahoo’s and AOL’s lunches, and those of many ad networks that, until Facebook ramped up its ad business, were the main alternative for advertisers looking to target sizable audiences.

What would make Facebook a huge Google-scale company is the theft of an entirely different meal: television advertising. After all, Facebook shows much more promise as a brand advertising medium than a direct-marketing medium like Google. It needs only to draw a small fraction of the $60 billion or so spent on television advertising, the biggest brand medium, to be enormously successful. But even then, it’s not mainly a Facebook vs. Google contest.

Facebook still needs to answer a big question, however. That’s whether its “social ads,” which incorporate people’s friends in ads in a 21st century version of word-of-mouth marketing, will have nearly the effectiveness in driving attention and ultimately sales as search ads, which appear in direct response to related queries, often involving products people are looking to buy. The potential is intriguing, and there are some nice examples of how well social advertising can work.

But despite Facebook’s considerable work in providing new kinds of metrics on marketing and advertising impact on its users, marketers and agencies aren’t yet universally convinced they need to spend a lot of money on Facebook ads. After all, they can get a lot of mileage out of their free Facebook Pages and Like buttons around the Web. (Not to mention, it remains to be seen whether these ultra-personal ads will cross what blogger Robert Scoble calls the Facebook freaky line.)

Bottom line: If Facebook is to be the Google of the this decade, its advertising has to at least approach the engagement of search ads, especially as Google itself moves to become more of a brand advertising platform with YouTube and continues its push into display ads. While Facebook is building what seems likely to become a great business on anew vision of advertising that could change many decades of tradition,2012 won’t be the year it closes that deal.

Continue reading

How Social and Mobile Will Disrupt Online Advertising

It’s no secret that online display advertising is going through huge changes, thanks largely to the fact that banner ads have never worked very well. Everyone from Google to Facebook to Twitter to a gazillion ad technology startups is trying to figure out something that will work as remotely well as search ads. So I’m always interested to hear how smart folks think display ads will evolve. This morning a panel at the TechCrunch Disrupt conference in New York, which I’m watching by its livestream, will be exploring this. On the panel: former Yahoo/Right Media’s Mike Walrath, now with Moat, a “search engine for display ads”; Carolyn Everson, new head of advertising at Facebook; Eric Litman, CEO of mobile ad platform Medialets; and Gurbaksh Chahal of ad network RadiumOne. TechCrunch editor Erick Schonfeld is moderating.

Q: Is the online advertising we have now sufficient or broken? Walrath: It’s broken, the way we’re delivering it to marketers is fundamentally broken. Two things are bullshit: that usage of the Net will drive brand spending; and that if that doesn’t work, sight, sound, and motion (video, flashy stuff, etc.) will solve it. Neither will.

Everson: For 10 years, every digital company has been trying to say you should move more advertising online, and they haven’t figured out why it hasn’t. TV is still strong. You have to get the creative community comfortable with digital advertising. They do not feel comfortable enough with the medium to bring more advertising to the Net. Can’t just offer a billion little boxes.

Q: Don’t online ad budgets have to take from TV? Litman: To think that dollars are not flowing in, that’s an argument from 1998. There are dollars available to come from traditional media.

Walrath: We’re having the wrong conversation–the latest whiz-bang way to target an ad. Just incremental. Until we change the conversation, we’re going to be battling for table scraps from traditional media. Channeling Wenda Harris Millard (who famously said years ago at Yahoo that online ad companies needed to do more than sell the ad equivalent of pork bellies, meaning banners sold cheaply by the ton)… We need to show purchase intent and brand recall. Otherwise, the conversation is meaningless. (Amen!)

Chahal: Disagrees (not surprisingly). Display advertising works. People want to spend more money. You can make that multibillion-dollar display industry better. Everson: The top brands care about the social graph. 50 million “Likes” per day happen on Facebook, which drives Facebook’s latest ad offering, called “Sponsored Stories,” which turns Like and other actions into ads on Facebook.

Q: To what extent does mobile and location help brands? Litman: I don’t need an ad to tell me there’s a Starbucks near me. That’s not the model for local advertising. It’s really much more defining where people are within a store, walking down an aisle, and using a tool to compare products; the brand can pay slotting fees to get their products in those tools. We’ve seen a bunch of search dollars coming into mobile. Walrath: Most mobile ads I’ve ever seen have been a shitty experience. Can’t just show ads–they need to be intrinsic to the apps being used. Chahal: Mobile ads are still pretty new–$550 million last year.

What’s Coming on the Internet in 2011 (Or Not)

I know I shouldn’t do it–predictions too often are either obvious or wrong–but I can’t help it. If I have to think about what’s coming in 2011, and I do, I might as well inflict those thoughts on the rest of the world. Isn’t that what blogging is all about? Anyway, here’s what I expect to see this year:

* There will be at least one monster initial public offering in tech. Take your pick (in more or less descending order of likelihood): SkypeGroupon, ZyngaDemand MediaLinkedIn, Twitter, Facebook (only if it has to). But despite many stories that will call this event a bellwether,  the IPO won’t bring back anything like the bubble days of the late 1990s (and thank goodness for that) because there are still only a few marquee names that can net multibillion-dollar valuations. UPDATE: Well, so much for that descending order. LinkedIn apparently will be the first to file–though whether it will be a “monster” IPO is another question. UPDATE 2: Well, here’s that monster IPO–since it’s hard to believe Facebook won’t go public if it has to disclose financials anyway. But it likely won’t happen until early 2012. Update 3: Now Groupon appears to be leading the IPO derby. Update 4, 1/20/11: Now it looks like Demand Media will be the first out. Again, not sure that’s the monster one, but if it’s successful, more will come.

* App fever will cool. Good apps that encapsulate a useful task or bit of entertainment–Angry Birds, AroundMe, Google Voice–will continue to do well. But those apps that do little more than apply a pretty layer atop Web content won’t get much traction–and moneymaking opportunities are uncertain in any case. The bigger issue: Once HTML5 becomes the widespread standard for creating Web services, enabling much more interactive Web services right from the browser, I wonder whether the need for separate apps will gradually fade. Continue reading

What Happened in 2010–and Didn’t

Somehow I persuaded myself a year ago to offer up predictions for what would happen in 2010–and what wouldn’t happen. Now it’s time to take my medicine and see how I fared.

What I said would happen:

* Merger mania will accelerate in technology, especially acquisitions of smaller firms. OK, so it was a bit of a gimme, but I got that right. Google alone bought more than two dozen.

* Branding will start to become more apparent in Internet advertising, with Google leading the way in display. I guess it became somewhat more prominent a push, but I’d say I was a year too early on this.

* Google’s software efforts will finally establish it as more than a search company, making it apparent what this pony’s second trick is. Android certainly established itself, the Chrome browser made significant gains, and Google Apps got some big new customers. Chrome OS was late, though delivered through an alpha laptop, and remains unproven, and so does Google TV. Overall, it’s an impressive showing, if not enough to identify software as its next trick.

* Yahoo will surprise on the upside, thanks in part to a pickup in brand spending. Wrong! Well, the latter happened, but not enough to buoy a sinking Yahoo. It laid off 4% of its staff and jettisoned once-promising operations. Well, there’s always 2011–and maybe that’s all there will be if CEO Carol Bartz can’t demonstrate that she can finally turn things around.

* Mobile applications will start to take off for the masses. Two words: Angry Birds.

* Twitter’s main business model will become more apparent, but won’t knock everyone’s socks off. That’s just about right.

* Facebook will keep growing, providing perhaps the first test of whether social media is a blockbuster business after all. No doubt about that, even if it’s not yet certain how profitable the company will be.

What I said wouldn’t happen:

* Tablets won’t be the next big thing in client computing. As popular as Apple’s iPad was, tablets didn’t take the world by storm in 2010. But I don’t doubt they’ll be much bigger in 2011.

* There won’t be as many tech IPOs as venture capitalists and startups are hoping. And no, there weren’t, even if 45 did go public, up from 16 in 2009. And none of them were the big names such as Twitter or Facebook that some had hoped for.

* Real-time won’t be a business. When’s the last time you heard that buzzword? Maybe when real-time search engine OneRiot did a layoff?

* Online advertisers won’t escape a privacy backlash. And they sure didn’t. More trouble is coming in 2011, too.

* Google won’t get hit with a major antitrust lawsuit that so many have been predicting for years. True, and it doesn’t look any more likely today.

So actually, I did pretty well, even if you could argue that some of those weren’t exactly stretches. Next up, predictions for 2011, and another opportunity to look like an idiot.

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