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Many people that I’ve spoken with at the recent TRAFFIC conference have suggested that Yahoo is dead and on its way to being buried. I’m a numbers guy and the numbers tell me that this is a long way from the truth.
In my opinion the problems at Yahoo are twofold:
1. Yahoo is not able to make decisions.
2. Yahoo is badly pricing their traffic.
 Over the years I’ve experienced Yahoo’s inability to make decisions with layer after layer of management trying to protect either their own turf or backside. This has inevitably led to a culture that drives out innovation and resists change. This is surprising considering the industry that they operate in is all about innovation and change.
For example, I just don’t understand why Yahoo keeps on trying to compete against Google where Google is strongest. You’ve only got to look at the recent decline in the number of Yahoo parking companies and direct feeds to large portfolio owners to realise that they can’t compete against Google in the same manner that they have in the past. That battle has been lost so Yahoo should cut its losses and move on.
I remember speaking to the then head of the Yahoo domain channel over 3 years ago explaining that they needed to change the game that they were playing with Google. What’s the point in playing chess against a grandmaster? You’ll lose! What they needed to do was play checkers. Do you think that Yahoo was able to do this? History has shown that they have fundamentally been unable to change.
So what game should Yahoo play? In my opinion they should be attacking Google where Google is weakest. Attack them with transparency. If domain owners could show potential investors exactly what they get paid and why they are paid it from advertisers, through the supply chain (ie. via Yahoo) to themselves then the value of their domains will increase.
Professional investors need numbers and transparency to properly value a portfolio. A higher valuation would then mean that Yahoo has moved the game from one of revenue to capital value. How’s that for an idea? To take this direction would mean a philosophical shift and a level a transparency that Google would not be able to duplicate.
At ParkLogic we recently conducted some analysis on 39,801 random domains over a 2 week period that received 50.3 million views. What we found was astonishing! Yahoo was paying well over double Google for the first 7.2 million views and then lost 43.1 million views to Google. What a crazy strategy!
We then worked out that Yahoo could have won an additional 38 million views if they had just repriced in such a way that they just won each piece of traffic. Why win by huge amounts of so little when you can win a total of 45.2 million views merely by tweaking the pricing by which you win. It just doesn’t make any sense and proves a flawed strategy.
To put this in perspective Yahoo is currently winning 23.55% of the domains and Google largely the balance. By repricing what they payout (ie. not costing them a dime more) they can change this to winning 88.53% of the number of domains.
It’s even more dramatic when we examined traffic changes. Yahoo currently wins 15.18% of the traffic but if they repriced their traffic then this would swing around to 89.49%. You just have to ask yourself what the heck are they doing at Yahoo!
Many domain owners forget that despite being much smaller than Google and lost in the wilderness of lack of direction Yahoo is still a multi-billion dollar company. I just wished that someone would stand up, risk their job, stick their neck out and make some decisions that change the malaise that seems to have gripped the company. How many more contracts do they have to lose in the domain space before they either exit or completely give up?
It appears that the last vestiges of creative talent at Yahoo are ducking for cover in the hope of reaching their long-service leave or have been squashed by a bureaucracy that requires 25 signatures before you are allowed to sneeze. Come on Yahoo, get off the mat!
Sure you have fallen a long way and it’s been a humbling experience but why don’t you smell the numbers and realise that all is not lost? Change the rules and unlike Google turn up to a domain conference full of your potential clients (your absence at TRAFFIC was noted) and be ready to eat some humble pie while seizing the market advantage. Don’t you realise that the entire domain industry is hoping and wanting you to get your act together!
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Unfortunately Yahoo is too big and too rigid to evolve and help themselves. Everyone at Yahoo operates under a top-down directive - of which does not help the company at all.
Even more, they have made far too many wrong decisions on too many levels. Unfortunately they are going down and becoming less significant everyday. Not just with domains - but on nearly every level of their business. They just don't get it. They are a stagnant company. It seems nothing will change that and they just don't care.
Too bad. I moved on a few years ago.