Solutions for Yahoo (Besides Microsoft’s Money)

This article by Hollis originally appeared in ClickZ on February 12, 2008.

Last week, I dealt with the sad occurrence of my father-in-law’s passing. The funeral brought together people from throughout the country because in addition to his job, his passion was coaching young swimmers, many of whom attribute their success to tenets they learned from him. For 40 years, despite few financial resources and subpar facilities, he churned out national champions year after year, earning him a National Swim Coach of the Year title. His protégés conjure up words like “strength,” “tapping potential,” “determination,” “outworking the competition,” and “fight” to describe what this man taught them.

I can’t help but think of these words when I consider a potential Microsoft-Yahoo merger. I don’t think the merger would be a positive thing for our industry. So I’m glad Yahoo rejected the offer, following my late father-in-law’s teachings. It needs to survive and thrive on its own.

Other than money, Microsoft has little to offer Yahoo. Besides than Internet Explorer, crammed down users’ throats as it tromped another innovative company, Netscape, has Microsoft brought any real leading Internet solutions to the marketplace? Does anyone consider Microsoft a powerhouse content company? Does it possess any real user loyalty? No. For the past decade, Microsoft has been in catch-up mode. Even when it tries to be innovative on the Net, it seems to fail miserably.

Our Yahoo rep has been the same person for over five years, while MSN offered us a series of reps who appear poorly trained in their own tools and not to be given much internal support. MSN’s clunky back-ends don’t further enamor us.

There were also valid concerns about CPM rate hikes. MSN already makes buying into its content either harder to facilitate or more expensive than Yahoo does. In our experience, mergers typically lead to cost increases.

What can Yahoo do to survive without Microsoft’s money? I’ve conjured up some ideas that have probably already been considered, but I’ll put them out there nonetheless:

• Adopt an iTunes-type micropayment model. Yahoo has so much content and so many features users have grown dependent on. Why not charge either a nominal amount per use or a subscription fee to access more customized features (Yahoo Finance, Yahoo Games, Yahoo Mobile)? Sure, many people will abandon Yahoo as soon as it begins charging for this content, but for the sake of ease or out of preference, others will accept the payment and stick with Yahoo.
• License the registration and targeting technology. Yahoo has done a good job of building a registered user base and an even better job of targeting and serving ads by fusing different aspects of user profiles with Yahoo content according to advertisers’ needs. Other than AOL, with an ever-dwindling user base, no portal or site has such deep, rich ability.
• Offer a business suite. I know so many business users who regularly utilize Yahoo’s collaborative tools, such as Yahoo IM, Yahoo Calendar, and Yahoo Mail. Although Yahoo now competes with Google in this arena, neither has made a concerted effort to offer upgrades, such as security overlays, Web conferencing, or project management tools that might appeal to a heavy business user. Our agency already pays subscription fees for several of these types of services. We’re so accustomed to using Yahoo tools, we’d gladly pay to keep them alive rather than lose them (or have them convert to a Microsoft product).
• Offer viable advertising solutions to reach B2B segments. Yahoo has been so consumer-focused that, other than nominal offerings for small businesses and Yahoo Search Marketing, it’s all but ignored this largely untapped market. There are very few viable means to reach strictly B2B audiences, and no one does it very well, probably because no one has really developed any real critical mass (sorry, Business.com). There’s money waiting to be spent — if only the right venue existed!

Over $44 billion is a lot of money to refuse. Kudos to Yahoo for doing so!

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