Unveiled: Yahoo’s New Strategy
With Yahoo! Inc.’s (NASDAQ:YHOO) new sheriff in town, change is coming. And first up for the Internet company is a move away from ads to revenue from fees and commissions.
The Wall Street Journal has reported that Yahoo’s new CEO Scott Thompson hasn’t offered any specifics with his desired changes but has been meeting with employees through small lunches and large meetings, telling them he will employ time and resources to Web services to gain future revenue, rather than manage the company’s profit margins with its current services.
But it’s not to say Thompson has completely neglected the online-ad business. He has also spoken with executives of Yahoo’s advertising-agency partners; recently he made a faux pas with one of them, the Interpublic Group of Cos.
According to The Wall Street Journal, Thompson had been asked about his opinion about agencies, and he responded that he prefers to be “as close to the customer as possible,” and noted that “I don’t like intermediaries that add no value.”
He tried to salvage the comment saying good intermediaries “can change the equation,” he put off some attendees. Yahoo and ad agencies have butt heads and other Internet companies that have tried to work with marketers but have taken them out of the process. Yahoo didn’t comment on the alleged conversation.
The jury is still out for Thompson who just joined Yahoo in early January. He has already seen changes in the company with its Chairman Roy Bostock and three other board members resigning this past week. In January, Yahoo co-founder Jerry Yang also left the board.
Thompson will face challenges with Yahoo’s online-ad business to produce results. Last year, $3.4 billion (78 percent of its net revenue) came from this. Thompson already has his eye on non-ad revenue sources. In January, he said that wants to use the data that Yahoo has accumulated from the site’s hundreds of millions visitors each month. Thompson also recently commented that this information is the “single most underrated, under-appreciated and underused asset” at the company.
Other projects on Thompson’s to-do list includes the evaluation of whether to purchase advertising-technology companies as a means to go up against Google Inc. (NASDAQ:GOOG) to sell graphical online ads through automated systems–a weak spot for Yahoo.
He will also work with his board to review the company’s stakes in China’s Alibaba Group Holding Ltd. of China and Yahoo Japan. They will negotiate with these company’s partners to rid some of their holdings for a $17 billion asset-swap deal.