Yahoo's first quarter earnings report wasn't exactly stellar, which Yahoo execs are attributing to the search agreement with Microsoft.
Revenue (excluding traffic acquisition costs) was down 6% from the first quarter of 2010 due to the "Search Agreement with Microsoft." Yahoo asserts that the decline will continue until the search engine giant "fully transitions all markets to Microsoft’s search platform." Namely, the problem is that not all of Yahoo's advertising customers are ready to deal with Microsoft's adCenter technology.
However, based on some of the details in yesterday's conference call, it looks like Yahoo might be pushing away from trying to be the search engine giant it once was. CEO Carol Bartz boasted that Yahoo is already the "premier digital media company," which is definitely a bit of a stretch, but here's where Yahoo is going when asked about competing with Netflix, Hulu, Amazon and similar companies. YouTube was asked about as well, but Bartz affirmed that Yahoo isn't necessarily interested in user-generated content, but rather original:
We're more interested in it as a media for entertainment -- in other words, video about entertainment, celebrities, and being entertaining about sports events, our original videos that we talked about. So we call them -- I call them snacks, video snacks, three to five minutes. These shows have become very, very viral. I think the area that we wouldn't stand down on is the fact that we could have some longer-format video through the right partnerships, etc.
Bartz promises that there is already "huge advertiser interest" about these "video snacks." Naturally, Yahoo isn't the first place I think of when looking for original video content, so this is going to take awhile for it to catch on. Additionally, you might be wondering what kind of content that Yahoo will be producing. Well, it's already gotten started by focusing on major events:
We're driving engagement with increasingly personalized and richer content delivered to any device. Let me give you two great examples this quarter -- namely, the blockbuster events of the Super Bowl and the Oscars. Yahoo! always sees big traffic around major events; that's nothing new. What's new this year are the technology advances and editorial focus that allowed us to program these big events in ways that drove even more engagement. For example, using our content optimization engine, we showed different Super Bowl packages to many different audience segments during and after the game. Hardcore football fans got on-the-field news. Other users got roundups of the [budgiest] ads. And still others saw broader interest stories. This simple, personalized programming drove more than 37 million clicks, double last year's numbers. That's huge. For the Academy Awards, we did even more. We levered new ways of promoting the events across the Yahoo! network through the home page, search, mail and media properties. We developed custom videos focusing on buzzworthy topics.
Having specialized content definitely makes Yahoo stand out more against the competition, especially when it is made available and optimized for mobile devices. But then Yahoo appears to be depending on huge entertainment events with global interest, which don't necessarily happen every month or quarter.
Yahoo has a bunch of other mobile projects in the works, but do you think this is a good path for Yahoo to take? Or is there something else that Yahoo should focus on to pull itself out of decline?
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