Yahoo! Inc., the dream child of two Stanford PhD graduates David Filo and Jerry Yang, was incorporated in 1994. The word Yahoo! has been derived from the name of a character from Jonathan Swift's "Gulliver's Travels". Yahoo's growth in the 90s was meteoric, and continually hogged headlines for some of its high profile acquisitions before the dot-com bubble burst.
Yahoo! provides many services including messenger, mail, chat, news, weather, finance, calendar, movies and music, and enjoys an excellent market presence in the United States, where about 150 million visitors visit its site every month. Its revenue is generated from search and display advertising via communications and communities, media, and search and market places.
Though Yahoo! has a strong presence in the U.S, many people are not entirely clear about the services that Yahoo! offers. This unclear image about its brand has cost the company dearly, as its competitor Google has slowly grown up the ranks to dethrone Yahoo! from its coveted top rank in in the US. This prompted Yahoo! to formulate several strategies, with the objective of creating clarity about its brand.
This is what spurred the need for the new $ 100 million ad campaign "Yahoo! It's You". This ad campaign was launched first in the US on September 28, 2010 to mixed responses. Yahoo! has also partnered with the domestic airliner JetBlue to host an on board Yahoo! channel, which it hopes will dispel the confusion shrouding the brand.
A less than comprehensive brand image is not the only problem that Yahoo! has been facing. The company which was once the undisputed leader in display advertising in the US has now been pushed to the second place by archival Google. The first quarter of 2011 showed Yahoo's share of the US display ad market drop to 12.3% from 13.6%. This is disturbing news for Yahoo, as display advertising constitutes its core business. Yahoo! even signed up with Microsoft to counter Google's dominance, but this venture has had a slow start, and hasn't matched its expectations in terms of the revenue-per-search (RPS).
Google hasn't missed an opportunity to snap at Yahoo's feet; it has been providing almost similar services that Yahoo provides. Despite this, many people in the US feel that certain services provided by Yahoo are better than the corresponding offers provided by Google. The services that stand out in comparison with Google's services are: Yahoo! Finance, Yahoo Answers: Q &A, Backlink Reporting via Yahoo Site Explorer, Flickr for photo uploading and sharing, Local Search, and Entertainment.
Yahoo's individuality doesn't end with just these services. According to an article in Computer World, Yahoo! has a 2-Petabyte data warehouse to analyze the behavior of its half-billion web visitors. This is claimed to be the largest database in the world. Even the IRS database (Internal Revenue System) of all the taxpayers in the US doesn't match this, as it is only about 150 TB.
Yahoo has also been working on new innovations to reclaim the number one position. As part of its future plans, Yahoo! plans to come up with a search engine that exceeds people's expectations. It claims that its Search Pad, which is still under testing and not available to the public, is one such search engine.
- Will the Search Pad be what Yahoo claims, in terms of being the next Gen search engine?
- Will Yahoo! be able to reclaim its number one position from Google in the US?
Yahoo! had been in an excellent market position before the dotcom bubble burst. Further, Google's entry into the market with its search engine changed the scenario for Yahoo. From then on, some of the companies like Google, MSN, and AOL etc. have been giving Yahoo! a good run for its money. In order to regain its foothold, Yahoo! developed its own search engine and launched it in 2004. It also revamped its mail in 2007, to compete with Gmail.
[...] Further, it launched global marketing and promotional campaign on television, radio, outdoor billboards and digital platforms to improve brand value and awareness worth US$100 million (www.peakpositions.com). ➢ Pricing: In July 2009, Microsoft and Yahoo Inc drastically reduced online advertising price dynamics via joint auction bidding partnership in United States and other core European markets to reduce dominance of Google on short-to medium term basis. Yahoo Inc, Google and Microsoft Bing require activation fees of US$5 for online advertising account. ➢ Place: United States is the core marketspace for Yahoo Inc; contributing (2010: 69.9 of total group revenues in 2012. [...]
[...] June 2013 Strategic investment in data and customer care centers at New York. January 2013 Strategic distribution agreement signed with Sony Music Latin in Spain. October 2012 Content collaboration deal signed with Wenner Media October 2012 Strategic alliance with Samsung integrating interactive platform “Yahoo Broadcast” with smart television sets. October 2012 Paramount and Yahoo creating entertainment content distribution hub related to comedy genre based programming. September 2012 Ken Goldman appointed as Chief Financial Officer May 2012 Jacqueline Reses elected as Executive Vice President, People and Development. [...]
[...] First quarter ending March 2013; Yahoo Inc revenue increased to US$ 1.22 billion, with year-on-year growth of The growth was primarily attributed to higher revenues in Americas 0.7 slightly offset by decline in EMEA countries Reverse restructuring expenses of US$7 million improved net margin to 34% (March 2012: 23.5 in March 2013. Thus from the above initial snapshot it could be seen that Yahoo Inc is facing steep competitive pressures into its core market i.e. United States. Although, the financial performance is in accordance with industry experts; primarily attributed to sale of Alibaba Group in 2012. Historical & Strategic Developments Google and Yahoo partnership was signed in 2000; followed by development of its in-house search engine in 2004. [...]
[...] The growth of online advertising is attributed to sharp decline of advertisers confidence in newspaper and periodical formats annually). ➢ United States online advertising spend stood at US$ 42.5 billion; with year-on-year growth of in 2012-2013. Internet segment accounted for of total regional advertising expenditure in 2013 (eMarketer, 2013). In United States, online time spent increased to 505,515 million minutes (2009: 384,196 million minutes). In next 4-5 years, online advertising is stipulated to increase by 73% (eMarketer, 2013). ➢ China online advertising segment stood at US$ 11.7 billion; with year- on-year growth of in 2012 (www.iresearchchina.com). [...]
[...] SWOT Analysis Strengths Weaknesses Acquisitions to shift focus towards Display advertising still account social and mobile markets for large share of revenue mix Valued brand with respect to Low penetration in Asia attractiveness to technology professionals Opportunities Threats Emerging markets fastest growing Substitute new media technologies related to online advertising such as OTT, IPTV, connected TV apps Content partnership to improve National and local government online traffic and unique visitors regulations related to IP ➢ Strengths: In past 18 months, Yahoo Inc has acquired twenty startups to enhance its long-term commitment towards mobile and social networking segments. Some of the acquired new start-ups stood at Qwiki (US$30-40 million), Tumblr 1.1 billion), Jybe (less than US$10 million), Stamped and OntheAir (both for less than US$6 million). The company still has US$ 4.8 billion in cash and cash equivalents. Yahoo Inc has witnessed sharp decline in brand value to US$ 3.85 billion in 2012. [...]
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