My two cents

Yahoo’s new leader may be an odd choice - but at least there’s a leader in the house again …

Breaking news hit the airwaves yesterday - Yahoo finally selected a new CEO, crowning Scott Thompsom (poached from PayPal) with the excitement and the burden of putting Yahoo back on track. The choice is interesting (as many news sources have noted) as Thompson has even less direct ad sales experience than Carol Bartz’ did, but his experience as a global technologist and expertise in brokering deals may be the ticket Yahoo needs most of all.

Thompson’s first order of business will be to get his arms around the multitude of assets and ad-experiences Yahoo has in their wheelhouse - then, and most importantly, figuring out what to do with them.

Yahoo’s interclick acquisition, combined with the Microsoft-AOL ad network partnership, may be where the silver lining emerges for a few reasons:

Advantages for Yahoo from Interclick + New Leadership:

  1. Resolves ad tracking problems: Yahoo’s current ad platform – while useful in identifying available inventory, is very bad at accurately tracking views and click-thru’s. Yahoo has often had to back-track with advertisers on the “actual” click through rates and re-validate price points post-mortem. In many cases, they have either issued $$ credits to their advertisers OR provided free ad space to keep the relationship baded on CTM numbers that did not match. Interclick gives them a cleaner way to capture and manage this data more accurately than today – thereby preserving revenue for the business.
  2. Resolves pricing problems: Even if Interclick is not the best ad platform, this does seem to solve the price transparency problem – Yahoo has a pretty big problem with digital advertisers buying up space on their many platforms, and then reselling at higher prices because they can bring better targeting to the model. Interclick appears to have the data insight capability to help Yahoo understand their own inventory more – and thus sell it better.
  3. Brings in new talent (bodies in chairs): They gain a talented sales force to help fill gaps across an organization already in a talent crunch, and even more so since Carol’s departure.
  4. Fills a sales talent gap (smart bodies in chairs): Further, this sales force is already smart on how to sell premium ad space based on strong content AND refined targeting. Yahoo, even with its 600-700M unique’s has been unable to monetize those eyeballs in the best way. This platform would give them better insight into their own ad sales metrics/value drivers PLUS sales reps who already understand how to sell that model.
  5. Provides an potential partnership platform: And finally, given the recent tie-up with AOL and MICROSOFT to combine their ad inventory and sell it through each other, Interclick may be a more advanced way to manage both Yahoo’s existing inventory PLUS that of AOL and MSN in a single place. The trio hasn’t yet decided what platform they are going to use, but at least Yahoo has a card, and a leader, in the game now.
  6. Helps create a focus on DATA: This will be where Yahoo can win, and win easily — the treasure trove of data they are sitting on is largely untapped, and with Thompson’s experience in monetizing data at PayPal, Yahoo may have the driver they need to (finally monetize their latent value.

Potential hiccups where Yahoo could fumble:

  1. Acquisition timing not aligned with strategic plan: Communicating the benefits of this acquisition was not timed with any real sense of strategic direction, leaving Thompson to this on the back-end now. Hopefully the market can be convinced of the value in this buy even this late in the timeline.
  2. Bad track record on integrations: Yahoo doesn’t have the best history of integrating acquisitions quickly which could limit the value they actually capture from this acquisition – even with new leadership  on board.

 

It will be interesting to see what Thompson’s first 100 days deliver – Alibaba needs resolving, Jack Ma needs some calming down (new leadership means his bid to buy Yahoo all but disappears), PE bids needs answers, and a market strategy for ad sales leadership need defining. It’s a lot to do – and unfortunately, Yahoo hasn’t left themselves much time to do it. Shareholders, and the market alike, may have very little patience for more slow-moving changes from this market behemoth – and the share price will take the hit over and over again.

Scott Thompson, you have a significant piece of work on your hands – best of luck pulling it off! Every ad sales devotee is hoping you really can turn Yahoo around.

4 months ago
  1. nasnyc posted this