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Sunday, August 14, 2016
Yahoo, Google and the Industry.
To include Yahoo and Google under one bracket is one risky title to start with considering Verizon’s recent buyout of Yahoo and Google’s passes at Apple to be the most valuable company. There’s a reason to it.
“Yahoo won the search engine wars and was poised for greater things,” said a Fortune article in 2000. Yahoo was valued $2.8 billion then and when Microsoft tried to acquire it in 2008, they allegedly offered $50 billion. Fast forward to 2016, Verizon buys yahoo for $4.8 billion. So what has changed in between? Press is full of various theories and takeaways many of which focused on Yahoo’s failure to buy Facebook and Google, or sell to Microsoft. But if I can think of one thing to attribute for Yahoo’s failure it is being on wrong side of major trends.
If people remember, Yahoo was one of the untouchable companies in 90s and it was the leader till mid 2000s to the point that Yahoo’s CEO got a 10 minute stage time for the historic iPhone launch in 2007 and Steve Jobs projected Yahoo as a force to reckon with. And then 10 years later, Marissa Mayer who was poised to be the only saving grace and had the potential to turnaround the falling corporation failed to revive and finally sold it to Verizon.
Now let’s look at Google. As of now, Google’s numbers look great! It is beating expectations quarter by quarter and Industry observers are walking away impressed after every earnings call. Google banked on digital advertising big time and are doing great! Google’s brainchild PPC (pay per click) – where advertisers are charged when advertising works – has become industry standards of how people look at the success of an ad. Even revenue streams of various companies are designed around PPC.
But the trend is changing faster than expected. Google’s focus is still on browsers, website and search which interrupt the user’s attention. These are now being replaced by advertising designed to engage them. Facebook, is on the right side of all these trends. As a result of Google’s focus on serving ads by interrupting user experience has impacted the rise in ad blockers. About 41% of internet users use an ad blocker according to a survey. As a result publishers are against these low-performing ads that clog the pages with takeovers, wrappers and pop-ups that weigh on load times and ruin the user experience.
Smart publishers have realised that instead of putting user experience at risk, a better way to serve ads is to engage them with sponsored content. The success of sponsored content depends on publishers delivering value and relevance to the readers. Publishers have realised that sponsored content is more effective vehicle for driving deep engagement and influence!
Facebook is built exactly for this. From pages to sponsored posts, Facebook has concentrated its monetization strategy on feed based units than interruptive ads and is more poised than Google for success on this road. Google’s answer for this has been AMP (Accelerated Mobile Pages) which again are search based rather than discovery.
In Conclusion, unlike Yahoo, Google has been good at identifying trends and get ahead of the competition. Their brilliant leadership made some strategic decisions to acquire products like Android, Google, AdMob, etc to stay ahead of the competition and it is fair to say that this expertise is bought than being home-grown.
But the business of digital content is more of curated than computerised. Google doesn’t have this culture in both structure and technology that is poised to take over this trend of curation because Google is always about left-brain comfort zone and computerising the activities than human curation. What Google needs now is a less Google-y approach to problem solving!
NOTE: The views expressed here are those of the author's and do not necessarily represent or reflect the views of DoT as a whole.