Four years on… Is Yahoo doomed?
As it’s been nearly four years since Marissa Mayer took the reins as the CEO of Yahoo Inc., there used to be much hope as well as anticipated positive changes to turn the fate of the company. But Yahoo’s underlying business challenges turned out to be even more gigantic. Whether it was a serious identity crisis or its inability to adapt to the fast-changing consumer habits, the media (or should we call it a tech firm) company seems to have failed to make such an anticipated comeback. Back in February this year, the company announced to cut back in its workforce to refocus their business strategy. And many of its online magazines have successively been closed down.
Remember when Yahoo was reaching its peak? Its market capitalisation was about $128 billion (via). ‘But as Yahoo expanded, other companies became more specialized and began eating away at its domination in niche categories.’ Today, its profits continue to fall. In the golden age of digital advertising and mobile marketing, how could this happen? We see many reports and experts debating where to point the fingers for Yahoo’s decline. Was it the lack of experience on Mayer’s side? Or was the root problem running deep inside the organisation? (On the other hand, a lot of her peers have expressed respect and praise for her on Twitter.)
A little too late to shift their focus on mobile advertising?
One of the first things that Mayer did was to look up the most popular activities that consumers did with their smartphones, says the New Yorker. As people predominantly rely on smartphones to check the weather, read the news and do general research, it just seemed a reasonable choice to expand Yahoo’s core services on mobile. In spite of the commitment of transforming Yahoo into a mobile-first company, their efforts didn’t really come to fruition.
That is not to say that there haven’t been any achievements. Prior to Mayer, the mobile revenue was so insignificant that it hadn’t even been reported in financial filings. The amount grew up to 32% of Yahoo’s total revenue, according to the New Yorker. Yet the number was still not significant enough when put alongside with that of competitors. ‘In the same quarter, Facebook brought in four and a half billion dollars—about eighty per cent of its total advertising revenue—from its mobile business. Google doesn’t break out its mobile revenue, but it’s believed to total many billions of dollars.’ According to Bloomberg, Google is dominating almost 70% of the Western European market. Yahoo’s purchase of Tumblr remains as a publishing platform. Whether you’re sympathetic to Mayer or not, there’s an underlying fact about Yahoo’s failed comeback. When it comes to mobile marketing, Yahoo lacked the advantages that Google and Apple enjoyed: a ‘mobile operating system’ or a widely used browser of its own’. Google, on the other hand, has Android since the 2000s. Yahoo is also said to have fewer mobile engineers, all of whom were narrowly specialised in html5.
Can video marketing revamp it?
But not everything Yahoo does is following a downward trend. Video production has risen by 54% since Yahoo has shifted its investment from acquiring video to in-house production. According to Adweek, ‘the company is focusing on four core content verticals: news, lifestyle, sports and finance.’ Yahoo’s content includes exclusive live interviews with journalists, correspondents and so on. So will that save the company? Given that video advertising is the fast-growing area of the business, the company could possibly re-gain more viewers and increase engagements. Having said that, Yahoo will face difficult challenges – their video content has to be outstanding enough to compete with the rise of online streaming businesses. The likes of Netflix and Amazon Prime have shown the proven success in producing their own original contents. It seems that if Mayer was determined to reshake the company, it definitely needs some sort of killer video content – such as live sports events and exclusive interviews with the President of United States.
What do you think?
Appnova is a digital agency specializing in web design, UX, e-commerce, branding, digital marketing and social media.
(image via Flickr)