New Yahoo CEO Marissa Mayer and Facebook founder Mark Zuckerberg have the same problem: Find a way to monetize a massive and sticky user base. But Zuckerberg has two things Mayer doesn’t - a company with a clear-cut mission statement, and time.
Spend some time talking with Vasant Dhar, the director of NYU’s Stern Center for Digital Economy Research, and Yahoo’s position doesn’t seem as dire as the headlines of the past few months have led us to believe. For one thing, the company still generates cash, And Mayer comes in with an impressive set of credentials that immediately ups the Silicon Valley profile of a company whose last CEO lasted just four months and, in that time, made one major (and questionable) move: dismantling Yahoo’s highly regarded research group.
“We’ve seen plenty of companies in this positioning throughout history. They’ll be flatlining for a while, and finally a CEO comes in and says we just lack definition,” Dhar said. “IBM was not that much different under [John F.] Akers, in which it was stagnant for awhile and then someone came in and said the current marketplace is all about services and we already have all of the pieces in place to excel.”
Whether Mayer will be Yahoo’s Louis Gerstner, who succeeded Akers in 1993, remains to be seen (Mayer declined to be interviewed through a Yahoo spokesperson). But Dhar said her first and most pressing goal is to define a mission statement for a company that has lacked definition for several years.
Yahoo Needs To Be the [BLANK] of the Web
If you look hard enough, you will find a mission statement that says Yahoo wants to “connect people to passions, communities and world’s knowledge.” That’s vague - more or less an amalgamation of the much more succinct and telling mission statements of Google and Yahoo, Dhar said - and a far cry from the Internet pioneer that Mayer referenced in her first memo to employees this week.
“What I remember of the original Yahoo is that it was a portal with categories of information largely handcrafted - and useful - at the time,” Dhar said. “They had a mission and an approach, which turns out wasn’t the best approach, but at least they had a mission.”
Dhar said there are no easy answers for Mayer, but the best strategy will probably revolve around finding a way to monetize the areas in which it remains strong. Perhaps Yahoo can be the Nielsen of the Internet, selling information culled from its user base to companies, or maybe it can find a more effective advertising strategy built around its content.
“If they define what they’re about and create interesting, vigorous communities in some of these large spaces where [they] already have presence, I can see that might be a workable strategy,” he said. “But first they have to define who they are.”
Make or Break Moment
Since being supplanted by Google in search, Yahoo has tried to find a new niche, growing ever more bloated as it added one mediocre idea after another. (For now, Mayer seems conetnt to stay the course: Her memo told employees to “keep moving” on their current assignments while she develops a “more informed perspective” of the company.) It does well in some content areas - finance and sports being noted for their large and generally sticky user base - but, as a brand and a place that users identify with, Yahoo is slipping.
Take, for instance, the second-quarter social login statistics for Janrain, which provides user login services for websites. During the quarter, only 8% of users used their Yahoo passwords to login to the 375,000 websites for which Janrain provides services, down from 14% two years ago. By comparison, Facebook accounted for 48% of logins, while Google accounted for 30% in the three months ending June 30.
In certain sectors, Yahoo’s dropoff has been even more pronounced. Janrain works closely with several media sites, including all of the Fox services. There, Yahoo logins have dropped to 11% from 27%. On retail sites, Yahoo logins are down from 27% two years ago to 7% in the most recent quarter.
“I think intuitively it’s not a surprise that Yahoo is no longer a top two or three provider,” said Bill Piwonka of Janrain. “Yahoo is pretty much yesterday’s news.”
“There’s nothing wrong with generating good content, but that can’t be your mission,” Dhar added. “Business as usual is not going to work... People don’t know what they stand for, and that’s not good.”