Tuesday, July 26, 2005

Yahoo! Positions Itself for 21st Century Media Success

Kudos to Fortune magazine for an insightful article (requires subscription for revisiting) on Yahoo!'s strategy to be the first to master the art and science of satisfying corporate advertisers looking for highly effective brand advertising on the Web. With major corporate advertisers beginning to shift ad dollars out of television, print and other traditional outlets (according to the article, 18 percent of Chrysler Group's ad spend will be online this year, with 20 percent or more expected next year), Yahoo! CEO Terry Semel is engineering Yahoo!'s ad services to please these big strategic spenders first and foremost. Wenda Millard, Yahoo!'s head of ad sales, has lots of online experience but is steeped in magazine ad sales and knows how to woo corporate spenders with campaign statistics, solutions and seasoned assurance. No wonder content licensors dealing with Yahoo! are pretty miffed. While Yahoo!'s audience is only now catching up in its overall size with major papers such as the new York Times and USA Today, it's a neck-and-neck race, with the growth rates strongly favoring Yahoo! Clearly corporate advertisers have a strong partner with which to develop their plans.

Add on Yahoo!'s savvy moves beyond PC browsers - new desktop widget tools that will make it easier to out-maneuver Microsoft for desktop media and Web services such as search, instant messaging, e-mail and news for Motorola's hot mobile phones - and you have the outlines of a 21st century media giant that will straddle decaying media companies reinventing old business models. I don't doubt the picture painted for a moment: the question is, will this play out the way that Yahoo! expects or will their supply of pliant and expensive content sources begin to dry up? Like a dominant cable TV franchise Yahoo! creates its own entropy in many ways, but with the center of aggregation moving ever closer to users it's far from clear that Yahoo! is going to be able to grab the right end of this evolving media beast in the long run any better than other traditional aggregators. There's every reason to believe that Yahoo! is going to be a 21st century "media colossus," but far less likely in a world of user-driven aggregation that they will be any more dominant than they are today. Good copy for the general press in the meantime.
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