Compare and contrast AOL, Yahoo: In their own words

Summary:Yahoo and AOL have a lot in common: A content focus, big freelance networks, dependence on display ads and new strategies. In many respects, Yahoo and AOL are the same. Here's a handy compare and contrast exercise.

Yahoo and AOL have a lot in common. Both are revamping to focus on content creation. Both have vast freelance networks. Both like local content. And both are unfashionable relative to the Facebooks and Googles of the Web. In many respects, Yahoo and AOL are the same company.

So when Yahoo CEO Carol Bartz and AOL CEO Tim Armstrong present at an investment conference within 24 hours of each other it may be time to play some dueling banjos. Here's a look at AOL and Yahoo on the key issues.

On mergers and acquisitions:

Armstrong has a $100 million limit on acquisitions tied to credit agreements. That may be a good thing given AOL got hosed on a Bebo acquisition. Nevertheless, Armstrong sort of hinted that AOL could go shopping. He said:

There won't be Hail Mary passes with the cash. The majority of investments or M&A we're doing -- we have a strategy, which is fund first. So if you see us dong acquisitions, it's probably because we have a mindset of something else, getting cash from doing something else. But you will see us do acquisition. You will also see us continue to pull cash into the company.

Bartz will also keep acquisitions small. On acquisitions, she said:

We do want to keep small acquisitions of good content, maybe women's content. We just did an acquisition of Associated Content, which is what's called crowd sourcing. So we picked up 380,000 writers that will contribute on any subject that you go out and ask for, which I think is really important for our local strategies.

Funny, AOL has roughly the same plan with Seed and Patch to play the freelance and local markets, respectively.

On the content front, Armstrong said:

Our specific strategy for content is to invest in the future bands for the digital space, for mobile, for the internet, for plasma screens. And you're going to see us continue to make more moves down that pathway. Content has a unique ability which I think is strategically important and also important as an investor, which -- one brand is able to cut across multiple platforms. So as much as the web changes and people change consumption patterns, as long as you're able to understand what content's important, the brand's important, and understand how to distribute it, it can be a very good business going forward.

On video, Armstrong saw video as a content platform. When asked about AOL's video strategy, Armstrong said:

We have a video strategy. And I'm not going to go into detail on it. In my household they went from fighting over the laptops to fighting over iPads to now fighting over Apple -- the number one request in my household right now is access to Apple TV. And I believe in the future if you look at on-demand trends and those things is, you know, the companies you just mentioned -- Yahoo, Google -- and a third one, Microsoft.

Bartz saw TV as a competitor on the ad front:

The real competitor is TV. TV is a well-known media, easy to buy, might be -- some of its metrics might be outdated because of DVR and so forth. But, the up-fronts and a couple phone calls and you know what you're doing. The deep side of this equation, called online, we like to make it very mysterious and complicated. So, that's hindrance number one. Number two, together with the agencies and the marketeers, we just took -- we screen scraped. So we just took part of a TV ad or a print ad and just threw it on the web. Well, the web is much more than that. You can have interaction. You can have people voting on your ads, you can have puppies running across the screen. And so what happened, is finally people are waking up and saying, wow, this is a different media and I need to have different style of advertising.

On competing with Google, Armstrong talked about two fronts: Content and ads. He said:

So our countryside, which I think is very differentiated from Associated Content and Demand, is we're heavy investors in brands -- heavy investors both at a global, and also connecting them at a local level. And there's a lot of opportunity between global and local. Not just for advertising, but for the kind of content consumption. So I think that's our -- our differentiation in, when people think of Google for search, Amazon for commerce -- I think they're going to end up thinking about AOL for content.

In order to compete in advertising, we have to compete with Google, Facebook and people who are very data-intensive. We needed to restructure the sales force and integrate the data systems together. That is a huge amount of work. But we made a decision to be public company and be transparent about our report card to be big in the future. Right now, the sales force is settled, we’re rolling out things like Project Devil, which is the new way we’re going to selling ads. And AOL is considered on every major ad buy right now. My calendar is booked with meetings with advertisers. So you’ll see a much more robust ad sales picture from us in 2011.

And Bartz noted:

Google has four times the amount of R&D dollars to spend. They're a money machine. I think it has a lot of people in several industries worried. However, they're also a great innovator and keep us on our toes and keep us honest. And so, I would say what any CEO would say faced with that question, which is, we're just going to have to figure out how to compete. We have a lot more properties, media properties to sell ads against. They essentially don't have the depth that we do of news, sports, finance, entertainment and so forth. So, we think we have an advantage there and we're going to work hard to keep that advantage.

On talent, the two companies diverge. AOL is hiring a management team and trying to create a new culture. Armstrong said recruiting talent is critical to the company and called out strategic advisor Jim Wiatt, who used to head the William Morris Agency.

We are a talent-driven company. I think we're getting more talent -- another place the press loves to (track) -- who's going, who's coming? We are a net importer of the world's best talent right now in general. We don't announce everybody who comes in, but I think [Jim Wiatt] who's sitting here in the front row is very well known as one of the best talent people on the planet. He was on our board. He's basically in kind of full time, helping us out now. I'm spending a lot of time with him. We were in Los Angeles together. So I would expect us to see a healthier, more robust company from a profit standpoint, from a growth standpoint -- you know, to get through, into 2011 -- and then I would have expectations around the fact that we're going to build some substantial brand in the content and the future of where things are going.

Bartz wasn't sweating turnover or the talent revolving door at Yahoo:

Well, first of all, I can't tell you how many times I've gone to my assistant and said, do you know who this person is? So, we look it up and it's about six layers down and they are a self-proclaimed Yahoo! exec. The good news is, I just want to stop for a minute, we are a fifteen year old internet company, one of the oldest internet companies. We spawned this industry and our execs are the people that are starting the other businesses because they know what to do. And so, in a way, I don't know, this isn't exactly a Silicon Valley crowd, but Fairchild Semiconductor spawned Intel, spawned -- most of the companies in the Valley had execs from Fairchild Semiconductor because that was -- they were the early execs in the Valley, they knew how to manage, they knew how to control expenses and so forth. So, I actually think, the way you think about all the GE execs that are out in the world running things. So, I think we're a great training ground. Number two, you are right, some of those people are stuck the way it was and they don't want to move as fast as we want to move or they want something slightly different and so, we're all happy if everybody departs in peace. And some we don't want to lose. And I would say right now we're in a cycle, but there's a few more we don't want to lose that we're losing. But, that's just the way it is.

Related:

Topics: Enterprise Software, Banking, CXO, Google, IT Employment, Social Enterprise

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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