Image via CrunchBase
Old but good link on Baidu:
In its early days, Baidu wasn’t modeling itself on Google. Li and Xu were much more interested in being the next Inktomi, a U.S. firm that powered search on other Web portals and was eventually acquired by Yahoo in 2002 for $235 million. Rather than host an independent site, Baidu licensed its search index to Sina (SINA) and Sohu.com (SOHU), then the dominant portals in China, and charged them each time a user conducted a search. Busy copying Yahoo’s portal business model, those companies didn’t realize search’s potential, concedes Charles Zhang, chairman and CEO of Sohu. “That’s how Baidu captured this opportunity while [we] were not paying attention,” he says.
via How Baidu Won China – BusinessWeek.
Its display advertising business, which accounts for about 40 percent of sales, fell 7 percent to $470 million, compared with the same quarter a year ago, in large part because of increased competition from Google and Facebook in the $17.5 billion United States display advertising market.
via Ad Share Slips Again at Yahoo – NYTimes.com.
Those who are talking about the search monetization value of Tumblr (to Yahoo) forget or are too young to remember the failed Google / Myspace experiments.
Not good if investors are already asking these questions. The two clearest advantages Mayer brought with her were ability to re-motivate and inspire the org and buying time/patience from investors and the (modified) board of directors.
Mayer’s honeymoon period with Wall Street may soon be over. It’s time for Mayer to begin proving that her plan to get Yahoo back on track works, starting with Monday’s results.
via Yahoo earnings: Mayer still has much to prove – Jan. 27, 2013.
Most analysts and buyers doubt that Yahoo would ditch Right Media at this point. But all agreed that investments in talent and tech are crucial for the company’s future.
So I suppose we’ll see a bit more acqui-hires:
The acqui-hires would also be more in line with Mayer’s intentions to build up Yahoo’s mobile andprogrammatic selling talent base, sources said. During the company’s most recent earnings call, Mayer repeatedly stressed the importance of mobile and programmatic buying to Yahoo’s future. The latter focus would seem to require more engineering talent to bolster Yahoo’s internal inventory management capabilities.
via For Yahoo’s Mayer, Size Does Matter | Adweek.
Yahoo’s De Castro Rolls Out Reorg of Ad Sales Unit – Kara Swisher – Media – AllThingsD.
The Googleification of Yahoo continues. Can this approach work on a company with a different DNA? Sales reorgs, or any reorg for that matter, is like surgery– you’re cutting into yourself and injuring yourself in the short run in hopes that you get better in the long run. This opens up questions about how much leash this management team has from the board. However, if you recall, Max Levchin just joined so the board so it should be more friendly to this management team that any other would have been in recent history.
New COO De Castro Planning to Move Yahoo Ad Sales to Category Model – Kara Swisher – Media – AllThingsD.
Restructuring is a big company’s version of pivoting. When there are missteps at big firms, senior management teams typically believe it’s an issue of organization structure / market fit. This is very different than in startups, where product-market fit is (in)famous.
In startup land, there’s an emphasis on creating products that have market demand. In Bigco land, it’s assumed that product-market fit has been found and scaled up to multi-million dollar products and when the firm stumbles in the midst of competition, it’s seen as an issue of having the wrong org structure for the market in which the firm is competing. Perhaps the market has changed and clients want something different or competitors have done something to alter the market dynamics. Regardless of the reason, business is down and a structural change needs to be made. (This is why you see firms in the doldrums restructure every couple of years).
Let me give you an easy, made up example: Apple is selling their iPhone 5 to the entire world. They look at China and they realize that sales are low because the Chinese value a different feature set. Larger screens, different app stores, etc. Apple decides they really want to become number one in China but in order to do so, they have to create a different product for that market with a feature set that’s optimized for demand there. This requires setting up decentralized R&D (vs their current centralized R&D approach). They set up a branch in Asia that cranks out “Asian iPhones” with larger screens. They close the gap with Android in China by becoming a more decentralized organization.
So going back to Yahoo, does this reorganization of the ad sales group put them on a path to better organizational structure / market fit? Well, there’s some data from Google that Mayer and De Castro can leverage. However, this has to be balanced within the context and resources at Yahoo. Their culture and capabilities may dictate how smoothly things go while instituting the change.
I have the pick of the litter in choosing a sports analogy for this situation because there are so many examples where a great player gets traded and put into a system that is not a fit for them. Or where teams change their scheme and it takes a couple of years for everyone to get used to the new scheme.
So that’s some background info on reorganizations. I’m sure that De Castro is also trying to make his mark on the firm as well so there’s probably a bit of that going on too but that’s given.
On Yahoo’s earnings call today, Mayer’s first, she stated that she believes there is more upside in the search business. The quote is not the clearest though:
On search versus display: Mayer says there is more upside in search. There is an opportunity to improve monetization. The content investment Yahoo has made provides a lot of opportunity in display. “I’m bullish on search and display, but because of audience targeting I’m particularly bullish on display.”
via LIVE: Marissa Mayer Posts Big Profit Growth During First Quarter At Yahoo – Business Insider.
Business Insider writes that Yahoo is likely to make acquisitions in the ad tech space:
Yahoo is likely to buy something in the ad-tech space. Mayer chose not to sell Yahoo’s ad-tech business. She plans to invest in it. There are going to be purchases, a source tells us. “Will there be big deals? Yes. Will they be crazy prices? No.”
via Marissa Mayer’s M&A Plans – Business Insider.
I’m not sure how I feel about that. Allocating resources to ad tech does not address Yahoo’s core problem. Money should be spent to address the core problem or to create a product that’ entirely new.