Photo: peanutian via Flickr
Yahoo just hired its fourth CEO in less than five years. Just about everyone is surprised at the choice because Yahoo makes most of its money from activities related to online display advertising, and the newly hired CEO, Scott Thompson, has no experience in these areas. He was formerly President of eBay’s PayPal unit.Not only that, he is an accountant and engineer by training.
Don’t get me wrong, there is nothing wrong with engineers and accountants (some of my best friends are… you know, and I have a degree in Engineering and worked for two accounting firms – albeit as a consultant).
It’s just their DNA tends to focus them internally toward the company and products. We have seen this before with Nokia and RIM and so many other companies. What Yahoo really needs is a CEO that is outwardly focused toward the marketplace and customers.
Why does the Company really need that? They have been experiencing declining sales and market share, and the previous marketing-challenged CEOs were unable to change this direction with their formidable technical skills.
Let’s be optimistic
The deed is done, and Scott Thompson had a great record at Paypal growing revenues from $1.8 billion to over $4 billion. Even if he does not have significant marketing experience, he is smart and can learn. Given the track record of the Company, however, he needs to learn fast – very fast. Shareholders tend to be impatient. And keeping talented employees requires stock options that tend to go up rather than down in value. The suggestions below are offered to help him with the marketing.
The first marketing area that needs work is branding. Yahoo has high name recognition and roughly 700 million unique monthly visitors. This is good, but in terms of brand identity, there is a problem. Yahoo does not generate a clear image in the minds of Internet users. A good test of that is to ask users for the first association that comes to mind when they think of Yahoo. If the answer is what the company wants and is consistent, the brand is working. If it is not what the company wants or is inconsistent, it is not working.
The brand should give visitors good reasons to visit Yahoo and buy. It should also provide some uniqueness so other brands cannot use the same messaging. With “It’s You,” any brand could say that, and it does not give users clear reasons to go to Yahoo. Instead of setting the world on fire, it rapidly burned $100 million in hard-earned cash.
Under its new leadership, Yahoo needs to identify its strengths, or competitive advantages, and match those up with sizeable market opportunities. Then it should formulate a brand image that will plant its competitive advantage in the minds of the target audience. The “It’s You” campaign did not identify any specific audience, and did not create any image than embodied Yahoo’s unique capabilities or advantages.
Yahoo has some great properties that many really like. Yahoo Finance, Flickr, Fantasy Sports are just a few that come to mind. The company needs to create an innovative way and compelling reasons for Internet users to come to the Yahoo portal as a starting and ending point for their Web visits. Given his expertise and comments to the media, it appears that Scott Thompson may already be moving along this path.
Once the right branding and products are in place, the promotion has to be good – really good. After the “It’s You” campaign was a dud, what did Yahoo do? They created ads that disparaged Google.
Disparaging a competitor is fraught with problems. Here are just a few of them.
- Makes you look unprofessional.
- Gives the competitor free advertising.
- Does not give buyers reasons to buy your product.
- Puts down the customers of competitors and turns them against you.
- Makes you look arrogant and insecure at the same time.
- Puts a target on your back if your product does not match up.
Instead, Yahoo ads should focus on the benefits it provides. How should it determine these benefits? Listen to customers and the marketplace. In Advertising Age, Abbey Klaassen outlined Yahoo strengths and benefits in her article “Why Yahoo Still Matters for You.” A friend of mine at Yahoo challenged me to create a benefit-focused headline rather than just criticise the “It’s You” campaign. O.K. here it goes. For Advertisers: “Where can advertisers reach 700 million unique monthly visitors? (Insert representative photo or graphic here to give readers a moment to think) On Yahoo!” For consumers: “Why does Yahoo! attract 700 million unique visitors each month? (Insert representative photo or graphic here to give readers a moment to think) They can find whatever they need in one place.”
Barracuda Sales Force
Once it has created a strong brand image and effective ads, Mr. Thompson should insure that Yahoo has a highly skilled, well-trained sales force that has the killer instinct to sell Yahoo’s online display advertising to agencies, companies, and just about anybody that can either buy advertising or refer others that will. Even if they are not potential customers, everyone is a potential referral source, and Yahoo could use all of the customers, prospects, and referrers it can muster.
Good people can do better marketing
Rather than squander resources on failed efforts of the past, Yahoo needs to employ better marketing. Most know the Yahoo name. Very few really know what it represents, which is surprising for a pioneer of the Internet. For the sake of my friends and all the other good people that work at, or invest in, Yahoo, let’s hope that Scott Thompson surprises everyone and takes the company from what it is to what it can be.