Wednesday, July 19, 2006

Yahoo and MSN cannot compete?

What is the problem at Yahoo and MSN? After four years of trying, they just seem to be slipping further and further behind.

First, MSN showed a drop in web search market share, down to 12.9% from 15.3% a year ago.

Now, as Saul Hansell reports, Yahoo is struggling. Some excerpts:
[Yahoo] reported weak revenue from Internet search advertising in the second quarter and a delay in a critical project that is meant to increase search revenue ... [as] it has been struggling to rebuild its search service.

Google ... produces 40 percent more revenue from each search than Yahoo does ... thanks to software that is better at selecting relevant text advertisements to place on a page of search results.

Terry Semel, Yahoo's chief executive, told investors ... that Project Panama, the company's effort to match Google's ad-selection technology, would be delayed by at least three months ... The two-year-old project is already many months behind its original schedule.

[Analyst Safa] Rashtchy said he estimated that Yahoo's revenue from search advertising actually fell in the quarter .... There [also] were some signs that the growth of Yahoo's vast audience had stopped.
Why are these companies unable to compete against Google?

Update: A couple days later, Saul Hansell reports, "Google Profit Surges on Strong Search Advertising".

Update: And Pamela Parker notes that "revenues at Microsoft's MSN declined 3 percent year-over-year." [via Barry Schwartz]

Update: Tony Schneider (former VP at Yahoo) says, "Yahoo has lost its appetite for experimentation." [via Findory]

4 comments:

Chad Evans said...

Could it be because both MSN and Yahoo want to match what Google does, they spend too much time identifying what it is they do, instead of just doing it? And, while Yahoo and MSN and planning the features that Google already has, Google is adding more features.

Peter said...

It could also be a case of the classic computing market balance of 80/20 between the dominant player and the second player. If it is, and Google is on its way to becoming the 80% player in search (and search advertising), then Yahoo and MS have a long way still to fall.

Jeff said...

I can't address the issue of search, but I can say that as someone who really believes that Yahoo! has a better grip on the Web's future as a social (as opposed to purely informative) medium, their execution on that vision frankly sucks.

Greg, you said it best right here, and I quoted you on my Yahoo!360 blog:

The experience of the World Wide Web as a whole should serve as a lesson to those building the next generation of community-powered websites. At scale, it is no longer about aggregating knowledge, it is about filtering crap. We need seek the signal in the noise and pull the wisdom from the din.

So the real question is: Who can filter out the crap most efficiently?

Yahoo! is stumbling because at the end of day the only human-rated content they effectively index and organize is that which comes from people already using their services.

Meanwhile, Google is the undisputed king of parsing the Web-at-large, and even though they do so programatically (for now, at least), the bredth and depth of what they're making accessable far outstrips Yahoo!

The answer to the above question therfore is: whomever can most accurately and efficiently parse the human-generated and human-evaluated content of the Web in its entirety.

To that end, here are some things that Yahoo!, IMO, needs to do pronto:

1) Completely archive, index, and organize all of their existing content. Why is it, for example, that if I join a conversation thread on a story in Yahoo! News that there's no way for me to ever find it again unless I bookmark it or memorize the thread number? Why isn't this information:

a) searchable, and

b) automatically associated with my Yahoo! User ID? Why is it that a news story I bookmark off of their main page today isn't there a week from now?

2) Abstract the platform and make custom configuration more user-friendly (for novices) and accessable (for people who know what they're doing). The Yahoo! UI Library and exposed APIs for things like Yahoo! Maps is a good start, but caters to a very small subset of their user base.

a) If I am involved in an interesting or informative discussion thread in a Yahoo! group, I should be able to "route" it to my Yahoo!360 page and/or cross-post it to my Yahoo!360 blog with the click of a button.

b) Why can't I generate totally unique content on GeoCities and integrate it into my Yahoo!360 presence? Or vice-versa? What if I'm an old-school GeoCities user whose had a homepage there for several years, and I want to plug-in Yahoo!360's blogging functionality? Why is this verboten?

3) If they're going to base their business model - in large part anyway - around user-generated content, then don't stymie user's attempts to generate the damned content in the first place! Case in point: the 4000-character limit on blog replies and similar restrictions in other places, espeically the reviews at Yahoo! Tech, are assanine. Especially considering that the bulk of user-generated content on Yahoo! is simple text. This limitation is ridiculous.

4) What's up with the simple text limitation, anyway? PeopleAggregator (to cite just one example) allows for the upload of audio and video files, as well as rich text. Yahoo! needs to enable this functionality ASAP, and it needs to be done through an aesthetically-pleasing, idiot-proof UI that is consistent across all of its online properties.

5) Respond to your users! I have taken the Yahoo! poll about a half-dozen times now, and all I've gotten for my trouble is an auto-generated "thank you" email. This is also the same response I get to emails sent directly to Customer Service and even to Yahoo! development teams. What is the point of giving Y!360, Y!Travel, Y1Tech, etc., team blogs if the Yahoo! employees assigned to those team never both to respond to anything posted on them?

6) GeoCities could learn a few tricks from Google Page Creator, the most important being that you don't deface user-generated content with obnoxious advertising. Note the word obnoxious. I know this is a business, and that Yahoo!'s free services aren't really free. How about some research into aesthetically-pleasing advertising (maybe Flash-based ad-games?) plug-ins for GeoCities that are relevant to page content?

7) Another word: aesthetics. Yahoo! doesn't have a consistent look-and-feel across its properties, and some (Yahoo! Tech, Yahoo! Health, Yahoo! World Cup, the new Yahoo! Main Page) are better than others by leaps and bounds (MyYahoo!, Yahoo! Groups). Yahoo!360 straddles the middle ground between these two extremes, and frankly I think its worse off for it. And on the topic of Y!360's UI - why is that when I look at my Yahoo!360 blog by clicking one link it's black-and-white, and fully customized when I access it by clicking another? My Y!360 should look like my Y!360 all the time, period.

8) Finally, knock down the wall surrounding the garden. Unless and until Yahoo! can figure out a way to parse the larger World Wide Web as effectively as Google does and somehow tie-in that information into its end-user experience, the very least they can do is make their user-generated content accessable to people who are not Yahoo! users. My #1 gripe on this topic: Yahoo!MyWeb. Not only is it extremely difficult to generate a tag cloud badge, even if you have one nobody who clicks on a tag can actually access the underlying content unless - you guessed it - they log-in using their Yahoo! ID.

Apologies in advance for the length of my reply, but I've been posing these quetions to Yahoo! through email and application development team blogs for months now, and I've never gotten a reply. At least here there's a real conversation going on!

Vinny Lingham said...

There is a simpler answer to this:

Google thinks of the entire Internet as their market, and operates in that fashion.

The rest think of demarcated geographies, and feel a need to cater to each market separately.

Classic case of Global Scale, vs local inefficiencies. By the time that MSN AdCenter is rolled out to say Egypt, Google would have been the dominant player for like 10 years - kinda hard to unseat that.

The other players need to focus more on leveraging the Internet to deliver a scalable global solution, locally.