Could a Social Strategy Save Yahoo?

The turmoil at Yahoo may be reaching crisis proportions. Stagnant sales growth was one thing, a lack of strategic clarity another. And now, senior executives are leaving in droves and there are calls for drastic action that include merging with AOL immediately.

But could a healthy dose of social networking be the cure to what ails Yahoo?

Possibly. The search giant appears to be missing out on social and mobile, the current twin drivers of consumer tech. I’ll leave mobile for another analyst, but here’s how Yahoo could gain some momentum in social media.

Recognizing Yahoo’s Assets

A prime reason for Yahoo’s social sluggishness was its inability to integrate its existing assets with a social flavor: Flickr, Delicious, Answers and its communications products like Mail and Messenger. These properties could still be put to use, but what are truly Yahoo’s powerful assets?

  • A large, loyal audience. According to Compete, Yahoo’s still in the top three in terms of online audience reach and user time on its sites. And as recently as a year ago, it was still consumers’ second-favorite online brand, behind Google.
  • Leading content and communication properties. Yahoo has leadership positions in important, ad-friendly online content categories like news, sports, women’s content and entertainment, as well as those communications services, according to Compete data.
  • Advertising expertise. Yahoo is a leader in online display advertising and has a large, experienced ad sales force with solid relationships at agencies and advertisers. Yahoo is especially good — for an online media company, at least — at brand advertising.

Building Out the Feed

Just about every company online should add some social spice to its site, but in Yahoo’s case, an aggressive dose could help the company maintain its huge audience and advertising leadership position. It’s too late for Yahoo to build a new social network from scratch. Rather, Yahoo should try to regain the momentum of its original portal role as the entry point or start page for the Internet by playing an aggressive role in the emerging age of feed-based user interfaces.

  • Integrated interface. Yahoo should continue and accelerate its feed and update aggregation strategy, but move it beyond just surfacing connections on the homepage or near content and email. Once upon a time, along with AOL, Yahoo taught mainstream users how to use directories and search for web navigation. Now it must more aggressively offer a feed to its audience — one that may be more familiar with traditional, search-heavy ways of  content discovery. Facebook is mainstream, but Twitter is not. Yahoo could help move mainstream audiences back and forth across search, browse, and stream consumption styles. A medium-size acquisition, say, TweetDeck or Seesmic, could help.
  • Ads around feeds. Yahoo should then apply its content, relationships and targeting capabilities atop or near the resulting UIs and experiences to create unique “advertorial” around that aggregation. Yahoo’s content farm acquisition, Associated Content, can work here, too, in addition to creating SEO bait. Yahoo has long worked with creating customized content experiences for brand advertisers and promoting marketing case studies and benchmarks.
  • Social ad network. Yahoo’s already in the ad network business (although there is concern about its publisher efforts) and it should rent out its resulting social ad platform to other sites. Most social media startups can barely spell “advertising” and might welcome the assistance. True, Facebook is already building out an ad platform with social targeting and a home for advertiser content. But it doesn’t have the richer store of seasonal and evergreen professional content that Yahoo has, nor its trusted content brand. And Facebook says it’s not building an ad network. At least not yet.

Related Research: Four Lessons From Yahoo’s Slow Demise

Question of the week

How could Yahoo use social media to get its mojo back?
Relevant Analyst
P1040724

David Card

VP Research Gigaom Research

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