The big news over the weekend is
the publication of an internal memo by Yahoo senior VP Brad Garlinghouse, dubbed the
'Peanut Butter Manifesto'. The crux of it is that Garlinghouse says Yahoo as a company is
unfocused and has too many product lines that cross over. Here is how he described
it:
"I've heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.
I hate peanut butter. We all should."
To stretch the peanut butter metaphor a little, Yahoo's peanut butter consumption is making it unhealthy and flabby. So like Garlinghouse, I think Yahoo needs to trim down their product portfolio. I'd go as far as to say they need to 'kill off' their web 2.0 brands. But before I explain why, first a little comparison with Google...
The funny thing is, the 'peanut butter' issue is exactly Google's problem too - remember a few weeks ago when Google CEO Eric Schmidt admitted publicly that Google had too many products and was trying to do too much? The difference though is that Google continues to set the financial world on fire, with its massive and still growing advertising revenues. Google's peanut butter consumption is actually resulting in bigger forearms and more chiseled abs!
Meanwhile Yahoo has had some much publicized hiccups in the financial markets - which the NYTimes nicely summed up today:
"The main problem is that Yahoo has not been nearly as good as Google at reaping profits from the huge volume of search traffic it attracts. Yahoo’s search revenue in the third quarter was $191 million, versus $911 million for Google..."
In a nutshell (pun intended): Yahoo is the biggest web property in the world, with more traffic than Google. But when it comes to revenue, Google has more.
To be fair though, Google has also promised to cut down its peanut butter intake - ref Eric Schmidt's call for "more features and less products", which means Google is re-focusing on improving and integrating its current products. Does Yahoo need to do the same?
From the product angle, Garlinghouse neatly summed up Yahoo's predicament:
"We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company.
- YME vs. Musicmatch
- Flickr vs. Photos
- YMG video vs. Search video
- Deli.cio.us vs. myweb
- Messenger and plug-ins vs. Sidebar and widgets
- Social media vs. 360 and Groups
- Front page vs. YMG
- Global strategy from BU'vs. Global strategy from Int'l"
There's a good argument to be made that Flickr doesn't cannibalize Photos, because Flickr is used by the early adopter crowd and Photos by your Mom or Pop. That's very true, because there is still a big gulf between the blogosphere and the mainstream. My feeling though is that Flickr's technology should be utilized more in Photos -i.e. why not re-brand Flickr as Photos. I can hear the gasps of horror from early adopter Flickr fans (of which I am one). But these are the kinds of hard decisions which Yahoo probably needs to make.
Yahoo could also try and re-brand Photos as Flickr, but that is a more risky proposition - and may I say, not Yahoo's style. They are well known as a tech company that straddles both mainstream and early adopters, very successfully. Far more successfully than Google, whose innovative Gmail application (for example) is still only used by a relatively small percentage of people.
If there's one thing I've consistently admired about Yahoo over the years, it's that they are quick to pick up on and action the latest web tech trends - but at the same time keeping their huge mainstream user base happy and comfortable. If you look at how they've integrated RSS into their products - MyYahoo, news, mobile, email - they've done that extremely well and without scaring off non-technical users. Now, I'd love to see Yahoo integrate other 'web 2.0' technologies into their mainstream product range - Flickr into Photos, del.icio.us into myweb, etc.
I'm over-simplifying here of course - Yahoo is a very big and complex company and things are never this easy. But when it comes down to it, I love to see the latest in web technology being integrated into products that real people actually use. That has traditionally been one of Yahoo's biggest strengths, so I can't see any reason why they shouldn't continue to do that, even if it means killing off the individual web 2.0 brands they acquired. Notice I said kill off the brands, because it's the technology in Flickr, del.icio.us, etc which is of most value to Yahoo now.
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"I can hear the gasps of horror from early adopter Flickr fans (of which I am one)"
Here's one:
If they rebrand Photos as Flickr, or even worse in my opinion, Flickr as Photos, won't this break the sense of community of Flickr? I believe so. del.icio.us. will suffer the same, in my opinion, if they force us into myweb.
Better yet, the recent revamp of Photos would all go to waste and Yahoo! would eventually loose both the Mom and Pop's and the early adopters.
I give you an example. Flickr still allows us to login through with a Flickr old-skool id and I do just that. I don't need an Yahoo ID. I sure would like to know how many Flickr PRO's (the site's bread and butter) are still using this old-skool login and never minded the Yahoo's efforts to migrate us to a shiny Yahoo ID (gasp!).
I may need to revisit that post Thomas Hawk talking about importing Photos from Flickr into Zoomr and giving a second look at reddit.com.
Disclaimer: I'm a Flickr client (paid for a PRO account) and a del.icio.us user with over 4000 tagged items.>
Posted by: Mauro Rita | November 19, 2006 4:38 PM
I agree Yahoo needs to move now before it's too late
Clarke
wHooiz Clarke Scott?
Posted by: Clarke Scott | November 19, 2006 4:40 PM
I have to say I agree with you ... which makes me a tad nervous with my life online ... but maybe that's the deal.
With Google seemingly intent on tracking my every move and then buying up the services (via the company that makes that service available) I should probably just get used to my "bookmarks" (say) being branded one way or the other.
My concern is, that I lose one of the following:
* Autonomy over what I (and no-one else) can do with MY content
* Functionality ... probably less of a concern as it's a rare case of functionality taking a retrograde step (but it does happen)
It might come down to answering, "What did [Yahoo!/Google] actually buy?" - is it my content and connections or a piece of functionality to be used. In the case of iRows it's definitely the functionality (via the brains of the creators) and not the content. With del.icio.us it's probably the content and connections (relationships if you will) that Yahoo! focussed upon (all those 'tags' to utilise) and the functionality was second.
On the whole one, good, product is better than a myriad 'competing' services for us service users (from the same supplier I mean) but my plea to Yahoo! (and Google!!!) is, think of those that are using your 'something' before merging it with your 'something else' - take it easy on us, treat us well and we'll be loyal to you.
Posted by: Mike Riversdale | November 19, 2006 5:07 PM
I think brands shouldn't be killed off! People use them not just for their utility, there are other reasons also - which I call shortly soul. YouTube did it and that's why Google decided not to take them under the Google Videos roof. And remember the GeoCities story, a billion dollar acquisition became nonsense after being rebranded as a Y! site. As you say, these 2 sites have different target audiences and should remain so; that's a strategy that many companies follow in other industries as well. See VW's VW, Skoda, Audi strategy for instance. I think Yahoo's problem is different.
Posted by: Emre Sokullu | November 19, 2006 6:20 PM
Mauro, I see your point that folding Flickr into Photos (as one example) risks the community Flickr has built up. I too am a pro Flickr user and I love the site (even if I don't use it for fun/arty photos as much as I could). But I could see the two products - Flickr and Photos - being brought together more without losing that community... I just think that Flickr is not really having much impact on the mass market (see the market comparisons to Photobucket for example) - and so its technology could be much more useful to Y! applied to the mainstream Photos product.
Mike, I agree with you - the core Flickr users like Mauro need to be treated very well and not take any community or functionality away from them.
Emre, I see your point -- but if you look at Writely for example, which you and I use all the time. To be honest, I don't really think I've lost anything when they re-branded Writely to Goog Docs (even though the design is plain now).
However your point about YouTube is a compelling one - but again I'd see Goog folding in their two video products to be one (probably keeping the YouTube brand tho). I don't think Flickr and delicious are anywhere near as strong in terms of brand as YouTube is though [ducks, as more howls of outrage and things are thrown my way!]
Posted by: Richard MacManus | November 19, 2006 6:34 PM
Hmm... Did you consider perhaps that these properties (delicious, flickr, etc) don't really have any good technology, and were only purchased specifically to get the traffic? I think that may be the difference between Yahoo and Google. Google buys technology to complement an existing and supported project or concept... Yahoo buys traffic when some random website becomes popular. And perhaps that goes back to the Gates theory, that Yahoo is at its core a content company, not a technology company. Maybe it should just license the Google adwords algorithm and concentrate on it's only competitive advantage, the #1 internet property.
Posted by: shadilac | November 19, 2006 7:42 PM
I agree with Emre--I actually think much of the reason that Yahoo hasn't integrated everything is because they realize that the brands ARE valuable. I think many people may not use del.icio.us if the brand was yanked at it was put under a person's MyYahoo! account.
Richard- Writely's brand is much less well known that del.icio.us and flickr.
Posted by: Drew Meyers | November 19, 2006 8:00 PM
That's an interesting theory shadilac. Perhaps I should explain that by 'technology' I also mean things like tagging, the UI, etc - so not just the nuts and bolts programming :-)
Drew, I agree the brands are valuable - but is it also holding Yahoo back by sticking with them? From a big picture pov? That's my main point...
Posted by: Richard MacManus | November 19, 2006 8:05 PM
I think this is a fairly narrow perspective. Brands, etc. is all window dressing. The main issue is that it's hard to advertise on Yahoo and easy to do so on Google.
Posted by: Franklin | November 19, 2006 8:11 PM
Mike (comment #3)-
I "study" things like Privacy Policies a Terms of Use for fun and as a consultant. You might find it interesting that some of the newest, hippest, "Web 2.0" companies have the most most ambiguous policies towards users. Take YouTube, for example. you are allowed to upload, and you retain copyright, but you forgive how that copyright may be used, and re-used. In fact, anything you upload to YouTube you are giving away - and they just sold for what? $1.6 BILLION - by collecting user "provided" content and basically giving it away - to anyone and everyone.
I see more "Web 2.0" companies including "rules for the user to follow" in the Privacy Policy than "traditional" web companies do - traditional web companies tend to keep the Privacy Policy as a document of what the Web Site promises you, the user. The rules belong in the Terms of Service Agreement. Instead the ambiguity is being complicated by many "Web 2.0" companies because now you are agreeing to two different documents - either of which may be modified at any time, and if you aren't going an looking for changes, you never no. But use the service after the "changed" document is posted, and you have, per the Terms of Use everyone uses, AGREED to new terms you aren't aware of... very odd.
Anyway, it's a long way to tell you that you have little control over your information once it's posted on the web - the devil is in the details - and those details are long and boring, and hardly fair... but they are legal, because you (and I, and most everyone else) agrees to them. Whether we read or understand them at all.
Rob
Posted by: Rob La Gesse | November 19, 2006 8:34 PM
Then there's the colour of peanut butter...
But seriously, if Yahoo's worried, shouldn't Microsoft too be, with all the Live and MSN and music stuff all over the place?
Posted by: Juha | November 19, 2006 8:36 PM
Let Flicr stay. It is a great brand.
Second, I agree with Franklin above, Yahoo is in trouble because it is hard to advertise on.
Posted by: Pramit | November 19, 2006 10:08 PM
The trouble with Microsoft is it is spreading peanut butter (Live) and jam/jelly (MSN)! Which Microsoft would argue makes for a tastier sandwich.... er, I mean user experience.
Posted by: Richard MacManus | November 19, 2006 10:09 PM
Richard- Yes, Yahoo needs to integrate those other brands. The way they do this is the difficult part. I think they should create co-branded versions of their other brands & provide single sign on functionality across all their sites. Companies are hard-pressed to be known for numerous things. Yahoo needs to just stick to being a portal--they don't need to have everything under the yahoo name to do this though (IMO). If anything, I think they should focus on builidng flickr's brand. Focus is lost if everything is under one roof.
Posted by: Drew Meyers | November 19, 2006 10:53 PM
@ shadilac - Your point about Y! buying for community and Google buying for technology is ludicrous to say the least. YouTube? Google had a perfectly good video sharing technology, they shelled out 1.65 bil for the community. Beyond that, Google has thousands of engineers working for them you don't think that they could have built a product like Writely? they could have easily developed that technology, they bought Writely for the community...
Flickr has grown something like 14 X since Yahoo! bought them. Yahoo! didn't buy that community instead they helped to foster its growth by letting it thrive and not just killing it because it was competitive to Y! photos.
Posted by: KEB | November 19, 2006 11:06 PM
If traffic is there, why changing a winning formula !? The problem is not a large portfolio but how to manage it ! For me, Yahoo is a web publishing company managing many "web titles"... merging "web titles" will encounter public reactions because style and contents don't suit same people. I suggest Yahoo to better manage backoffice, technology...to be a powerful engine to manage "web titles". Ads and traffic are based on better focus and "know you customers" basements. If Google reinvented ad business, Yahoo could reinvent the "web publishing" business. On the other hand, newspapers face monthly circulation decreases, monthly magazines revolutionize themselves (Times...) mean...readers, surfers are changing. This is more than just a fact !. A revolution is slowly ramping. There are opportunities to leverage new trends and to overcome past leaders !!
Posted by: Alain Marsily | November 20, 2006 1:18 AM
How do you think hardcore Flickr users would feel about "Yahoo Presents ... flickr!" or even "Yahoo Photos Presents ... flickr!" ?
Posted by: Scott Rafer | November 20, 2006 8:51 AM
Richard,
With all due respect, you are so far off the mark that I don't even know where to start. Garlinghouse's memo smacks of internal politics and perhaps his frustration that some of the cooler brands are under a different division (Search and Marketing).
Yahoo's biggest challenge is figuring out how to "get younger" because it has what is now an aging demographic and a very static brand. Moving toward hipper brands and away from being a monolith is precisely the direction they should be heading. Witness flickr's astounding growth (up to top 40 in Alexa) with little or no promotion from the parent. Flickr is a product designed for an entirely different use case (photo blogging + community) and will NEVER gel with the album based world of Y! Photos.
Set aside the products for a second and take a look at the underlying issue. Yahoo made a brave stand in 2000 in figuring out how to monetize community and communication applications (mail, photos, etc.) which are extraordinarily difficult to monetize. Then along comes Google, flush with cash, and turns all these apps into toys and loss leaders.
The titans have two proven methods of earning big money -- search and branded advertising (for the highest traffic areas). If Yahoo wants more money, then they need to be better at search, better at driving search, better at identifying channels (small spaces), and better at selling branded ads into them.
There are clearly some internal vision issues but burying things under the Yahoo brand isn't going to fix it. And holding Google out as leading the way in brand management is pure folly--they are making it up as they go along.
Posted by: Narendra | November 20, 2006 9:23 AM
These are all great points and perhaps I am dismissing the brand values a little too quickly. But I stand by my point that "it's the technology in Flickr, del.icio.us, etc which is of most value to Yahoo now." At the very least they should integrate the teams and the technologies. I don't accept that Flickr and Photos are two such different beasts that they can't work together, as implied by this statement:
"Flickr is a product designed for an entirely different use case (photo blogging + community) and will NEVER gel with the album based world of Y! Photos."
When it comes down to it, aren't both photo sharing products? The skills of the Flickr team can be applied to Photos - and vice versa I'm sure.
Posted by: Richard MacManus | November 20, 2006 10:36 AM
The problem with yahoo isn't the large number of (competing) products. You've said it yourself: they're not making enough profit off searches.
Google doesn't make money out of Calendar, Google Talk, Picasa, Earth. Google is only making money off the searches.
And they're better at it than Yahoo!
Sure, it's interesting to discuss the competing services of Yahoo! and while emphasizing just that, joke about their overpriced takeovers in the past. But we're really smalltalking about products that don't make any money and millions of people are ejoying.
What we, or probably Yahoo!, should do, is stop worrying about fun products (that don't and will never generate profit) and start figuring out the "how" of Google's success.
How does Google generate twice as much profit of every search?
Posted by: Mark van Zanten | November 20, 2006 12:40 PM
Richard,
While Y! Photos and Flickr are essentially for the same purpose, Flickr has an (amazing, totally unrivalled) community around the brand and around the tools.
That community is incredibly valuable, and creates value in ways Y! Photos never could, or would.
Perhaps MORE people will use Y! Photo and never be members of Flickr, but that is not a bad thing. More people does not equal better community or more residual value.
The residual value in Flickr is immense. And, as someone noted above, it's a younger, hipper brand.
Posted by: Franklin | November 20, 2006 1:14 PM
Narendra, let's leave the specifics of BradG and flickr out of it for a minute. Are you saying that old brands can't be updated, and Yahoo should just start over on a branding basis?
Posted by: Scott Rafer | November 20, 2006 1:30 PM
KEB, with all due respect you can't pull out one example and say that proves the largest point I addressed regarding strategy is not still correct. You must also have missed the Cuban posts of a few weeks ago, if true, Google conspired from the beginning to make Youtube a star, they didn't just buy it after it become popular... and when they bought it, it was an almost entirely stock transaction. Why not just call Google the new Federal Reserve.
Posted by: shadilac | November 20, 2006 3:01 PM
KEB, I didn't address a few points you made. All the evidence points to Google buying technology, even writely. Is that not the basis for their new docs service? Have you been to writely.com lately? That's a completely different strategy then that employed by Yahoo. That's not to say Yahoo's strategy can't work, maybe Flickr is a good example of that, but my point is that perhaps Gates was right, Yahoo isn't a technology company. Maybe they could be if they hired thousands of top quality engineers like Google. But without those resources, how can anybody be surprised when they aren't able to compete.
Posted by: shadilac | November 20, 2006 3:10 PM
Shadlic - I think we will have to agree to disagree. No, I don't read cuban so I am out of the look on that. I have been to writely lately and its gone. but that is not to say google couldn't have just as easily built a doc program instead of buying (like they did with spreadsheets). Clearly they have different acquisitions strategies but I am so over the google @$$ kissing, not everything they do is amazing, but they definitely monetize search way better than anyone else.
Richard as far as your post goes don't you think that these sub-brands are in a way like high end of the Y! brand. They aren't going to appeal to the everyday web consumer but they definitely have their audience, and their audience is influential. Gap owns Old navy, banana Republic, fourth and towne all selling clothes but at the same time all pandering to a different audience.
Posted by: KEB | November 20, 2006 3:50 PM
Mark (#20), I think Yahoo's product strategy is more crucial to them than search - they're a content company after all. Their number 1 ranking as a web property proves that. I think it'd be a mistake for them to try and take on Google in search, because quite simply Google's market share in search is far beyond Y!'s now.
Re: "What we, or probably Yahoo!, should do, is stop worrying about fun products (that don't and will never generate profit) and start figuring out the "how" of Google's success."
I disagree, the worst thing Y! could do now is try and copy Google in search. Y! needs to worry about these "fun products" - and how to turn a profit from them. Search is a part of that equation, sure, but when it comes down to it Y! will stand or fall by their product portfolio. And *that* is why branding is a crucial part of it.
Posted by: Richard MacManus | November 20, 2006 3:53 PM
KEB - We can agree to disagree on that point, but I just have to correct the record -- I'm definitely not kissing anybody's behind. I have worked with Google (with, not for) on projects and I know they do some things well and other things not so well. I don't like their stated goal of organizing all the world's information, from a privacy perspective, in fact I find it quite worrying that anybody actually has the resources to even attempt that... but I digress. When it comes to strategy and execution, they are miles ahead of Yahoo and if you've ever been to the Google complex out in San Jose, definitely a fun place to be.
Posted by: shadilac | November 20, 2006 9:30 PM
Scott -- more or less yes. I am only speaking regarding new media, but I believe that big brands are only useful if they instill trust and offer some sort of community. Would you rather be part of dogster or Yahoo! Dogs?
In many ways the web has delivered on the promise of a level playing field. The achievements of MySpace and YouTube are phenomenal in trajectory and also brand building. It is their very "otherness" that is a core component to their success.
If anyone out there can think of a brand upgrade to Yahoo that is going to draw in a younger demographic to Yahoo, I'd love to hear it. New colors? Come on, not going to happen. It is hard to go indy once you are a monolith.
One curious phenomenon is how newer brands are quickly establishing trust among users (something very different from the legitimacy that web1.0 companies once thought was easily attained with a superbowl ad). Based on my experiences with 30 Boxes, it is all about customer support and responsiveness. The two-way web is very real and responsiveness will be the avenue toward successful businesses.
Richard -- regarding "photo sharing" products. Images (and soon video) are becoming commoditized building blocks of applications. Flickr, eBay, Facebook, and Kodak all traffic in millions of photos for very different use cases.
Specifically in the flickr/Y!Photos case, I believe that there has been some exchange. Y! Photos got a makeover, Flickr was toppling over before their acquisition and have scaled nicely. I would assume that Flickr and del.icio.us have been put to work by Search and Marketing to better understand the implications of tagging (one of the core reasons why they were acquired). The fact that flickr went mainstream in size is simply a bonus upon the massive PR windfall that came it!
To summarize, GYM are all in a battle for NEW users and new inventory. Google owns search. In applications, Yahoo and Microsoft own the "legacy web" and as long as they continue to do enough they should only leak at a small rate.
The battle is on for the younger set and I think new fresh brands and rock solid customer support and a sense of community are the keystones to winning them. Good products help too ;-)
Posted by: Narendra | November 21, 2006 7:55 AM
Hmmm... By this argument, big multi-brand companies like Coca-Cola, GM, Procter & Gamble, Bertelsmann, Sony, Disney, etc., should all kill off their "competing" brands and focus, focus, focus! Why waste time on multiple brands and models of cars when you can just have the Chevrolet Whizzo? Why have all those different flavors of fizzy drinks when you can just sell Coke?
Perhaps it's just me, but I think having multiple brands/products/what-not is a way to provide choice to the customer. Pruning things down seems a way to make life more easy for senior management with a total disregard of what the customer may or may not want. Which is why it's wholly unsurprising Garlinghouse's memo is such an internally-focused document -- I would expect just such a thing to be written by Dilbert's pointy-haired boss, or Lucy Kellaway's Martin Lukes character in the Financial Times.
Oh, and in the interest of factual accuracy -- Photos long pre-dates Flickr. I've had my Photos acct for years, but have hardly done anything with it -- mostly because it's a boring site. I've done far more with Flickr in the much shorter time it's been around. So I'm not sure how much your generalizations about "early adopters" hold up, given the difference in the two sites' ages.
One other thing:
"Yahoo is the biggest web property in the world, with more traffic than Google. But when it comes to revenue, Google has more."
If so, this is yet another example of how markets are irrational, and says next to nothing about the skill or luck of either company.
Posted by: Hal O'Brien | November 22, 2006 12:06 AM
Rob La Gesse (comment 10 - sorry for the delay)
---
You are perfectly correct, I am signing away my copyright when I upload everything ... what does that mean for the "wired society" that I believe we're all rushing towards? Once "storage" and "services" are all provided via the "Web" then what about content ownership?
Is this something anyone is tackling/commenting upon?
Posted by: Mike Riversdale | November 22, 2006 2:31 PM
- Deli.cio.us vs. myweb
its not deli.icio.us its del.icio.us
i know that you know but you made a mistake ;)
Posted by: Ram | November 26, 2006 3:31 AM
I still think Flickr is the vanguard example for Web2.0 companies. Based on it's sheer ease of use & truly a joy to experience. I find other Social sites like MySpace to be very clunky to navigate. Flickr is still the shining light in the Web2.0 universe* ;))
Posted by: BillyWarhol | December 23, 2006 10:44 PM