Read with interest this analysis from Dave McClure on VentureBeat.com. In reference to all the noise that happened around the Peanut Butter Manifesto, he contends that Yahoo’s main problem currently is monetization.
“While Yahoo substantially outpaces Google in page views, Google does a much better job of converting traffic into dollars than Yahoo and is kicking their butt in revenue per search and revenue per page. As long as Google keeps monetizing traffic at a far better rate than Yahoo, they can always afford to pay more for acquisition or partnership deals”
He suggests three things to improve Yahoo:
- Ship the new Panama advertising engine platform asap
- Figure out a way to implement CPA-based (Cost Per Action) advertising
- As monetization improves, accelerate acquisition activity (both large & small)
On the acquisition side, he suggests: “they should be doing small acquisitions ($25-50M) every month, larger deals ($100-500M) every quarter, and betting big ($1-2B+) once a year on a deal like Facebook or YouTube. So far, Yahoo has only done a good job on the small stuff — they’ve whiffed on most other big deals since Overture. In summary: buy LOTS of stuff, do it FASTER, then distribute it across your worldwide audience and monetize using your advertising engine.”
What it means: This reminds me of multiple conversations I’ve had around monetization of traditional media companies’ web properties. Most industry analysts asserts that one of the risks traditional media companies like newspapers, radio, TV or directory publishers face is the fact that they do not monetize their online traffic as well as their offline one. But after reading this article, I wonder if anyone except Google is monetizing properly their online traffic? Has anyone calculated the eCPM of the whole Yahoo network? It’d be interesting to compare with some sites well-monetized offline media sites like the Wall Street Journal or Pages Jaunes in France.
Harry adds: It boils down to the ad engine and overall execution. Yahoo is a media company, Google is an advertising company, it’s all about Adwords and Adsense and have done a terrific job of optimizing both. How many SME’s rave about “Yahoo! Search Marketing Products”?