Yahoo Wants You to Linger (On the Ads, Too)


Four editors were deep in debate at Yahoo Food’s offices in Manhattan: Would Yahoo visitors click on a feature about foods of the ancient Silk Road, or would they prefer a guide to cheese fries and other snacks that go well with ranch dressing for the Final Four basketball games?

Rachel Tepper, the resident history buff, said people would be interested in how wheat and millet spread throughout the world millenniums ago. Julia Bainbridge, who joined Yahoo Food last year from Bon Appétit, had her doubts.

“I don’t see our readers clicking on, ‘What’s the deal with the Silk Road?'” she said.

Such choices – ranch dressing versus food history – are the stuff on which Yahoo’s future now depends.

The Internet pioneer still attracts a huge audience, but advertising, its prime source of revenue, is steadily declining. Marissa Mayer, the chief executive, has decided that one way to reverse that decline is to turn the company into a media empire with a constellation of what it calls digital magazines on topics like food, technology, movies and travel.

Mayer says she wants to make Yahoo a “daily habit” for its 800 million users. But she doesn’t want people to come to Yahoo just to read email, post photographs on Flickr or get the latest sports scores. She also wants Yahoo to be a place where they curl up and spend some time, whether they are into haute couture, the latest gadgets or tabloid gossip.

And curling up right beside them would be the advertisers.

Built using technology acquired last year as part of the company’s $1.1 billion purchase of Tumblr, the new publications combine original articles and material licensed from other sites, as well as big photos and videos into an endless page of tiles aimed at enticing people to linger. Mixed into that stream is a different kind of advertising – so-called native ads or sponsored posts – which look almost exactly like all the other articles and videos on the page except that they are sponsored by brands like Knorr, Best Buy and Ford Motor Co. These ads, Yahoo hopes, will attract the attention of more readers and make more money for the company.

In some cases, Yahoo editors even help to write that advertising – a blurring of the traditional lines between journalists and the moneymaking side of the business.

“We think that digital magazines can be a great advance, creating a different category of content consumption,” Mayer said in an interview a few months ago at the company’s headquarters in Sunnyvale, California. “You can layer in video. You can change the content. You can bring in the social aspect. You can tell someone, ‘Oh, by the way, your friend also read this article and thought it was interesting.'”

Mayer has spent millions of dollars on this push, much of it to recruit celebrity talent. The newest magazine, Yahoo Beauty, which went online this past Monday, is edited by Bobbi Brown, founder of the cosmetics line that bears her name. The company has also snagged big names like Joe Zee, formerly creative director of Elle, and David Pogue, a best-selling author of personal technology books and a former columnist for The New York Times.

For video, Mayer hired Katie Couric to conduct interviews and to host several programs; clips are shown both on the magazines and on Yahoo News. Each magazine has also begun its own video series.

But despite the bold hires and grand ambitions, the plan to turn Yahoo into a media giant has a been-there, done-that feel, and it is far from a sure thing.

Since its early days, Yahoo has repeatedly plunged into media – creating a celebrity gossip site, starting dozens of video projects and hiring journalists to do original reporting around big events like the Academy Awards – then faltered and retreated. Becoming a content powerhouse is even more challenging now.

Today, people get much of their news and entertainment through links from social networks likeFacebook and Twitter. The Huffington Post and a host of smaller sites are masters at manipulatingGoogle’s algorithms to show up at the top of its search results. Apps on smartphones and tablets, where Yahoo has a minimal presence, are rapidly displacing the personal computer, the company’s traditional stronghold. And viewers have learned to tune out display and banner ads, sending ad prices (and Yahoo’s revenue) plunging.

The magazines certainly aren’t generating much excitement among shareholders. Much of Yahoo’s $34 billion market value comes from a stake in Alibaba, China’s leading e-commerce company, which plans to sell stock to the public in the United States later this year.

“Yahoo’s problems are fairly deep, and just having some relatively new content initiatives is not going to solve their structural problems,” said Ben Schachter, an analyst at Macquarie Capital.

Still, Yahoo needs to do something different if it wants to reverse its long slide toward irrelevance. Mayer hopes the magazines will be a classier place to advertise and more lucrative for the company.

Mayer, an unabashed fan of glossy print publications like Vogue and InStyle, would like to see Yahoo’s sensibility gradually move more upscale, even though its core visitors are more midmarket. Analysts and others in the industry are skeptical that this will work.

“A brand like Elle or Vogue is really luxury fashion,” said a longtime magazine industry executive, who spoke on condition of anonymity because of continuing relationships with Yahoo. “That kind of content is never going to resonate” on Yahoo.

‘Out in the Wilderness’
Jerry Yang and David Filo founded Yahoo two decades ago as a directory to the nascent World Wide Web. They soon added a better search engine as well as news, weather, sports and email, competing with mass-market sites like AOL to become the gateway to the Internet for the hundreds of millions of people just discovering it.

Consumer brands, seeking the best way to advertise to Web users, were initially drawn to Yahoo’s large audience, and Yahoo raked in the ad dollars.

Then came Google. As more people began their Web forays with a Google search, advertisers flocked to it, siphoning much of Yahoo’s search ad business. And a proliferation of specialty sites – and, later, Facebook – began competing for display ads.

When Microsoft made a $44.6 billion bid for the weakened company in 2008, many investors urged Yahoo to take the money and run. Yahoo’s board rejected the offer but cut a deal to hand its search technology to Microsoft and share search ad revenue. Yahoo spent the next four years drifting without a clear strategy, going through four CEOs and losing tens of millions of users before Mayer was hired from Google in 2012.

She focused first on improving Yahoo’s products and expanding its mobile team. The companyrevamped Yahoo Mail and the Flickr photo-sharing service and added smartphone apps like the Yahoo News Digest and Yahoo Weather to give the company a foothold in mobile.

Filed in: News, Social Media, Technology News

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