Yahoo Refocuses on Search

In the aftermath of Yahoo replacing Google and launching its own search engine, NYTimes writes about Yahoo’s plans and challenges:

Under [CEO] Mr. Terry Semel, Yahoo has become a big hit on Madison Avenue, with advertising revenue surging ahead of its traditional rivals, America Online and Microsoft’s MSN. Yahoo now has about 70 of the top 100 national advertisers as clients.

But now Mr. Semel must win over a tougher audience: Silicon Valley. In many ways, Yahoo’s main rival is Google, started five years ago by two brainy Stanford graduate students who believed, against conventional wisdom, that sophisticated computer science could produce better Web searches.

Mr. Semel says the new search engine is just the beginning of a rapid series of improvements to Yahoo’s search capabilities. Many of these, he says, will try to exploit Yahoo’s two main advantages over Google – its vast array of original content and a database with information about its 133 million registered users. Knowing where searchers live and what their interests are, Yahoo believes, will let it present results that are more relevant and advertising that is more focused.

In addition, he is turning his attention to Yahoo’s specialized areas, like finance and music, which he plans to bolster through a series of major product introductions and acquisitions over the next year.

Ultimately, Yahoo wants to take share not from other online sites but from television and other traditional media. Of all the time people spent last year using media, 4.9 percent was on the Internet. But online advertising represented only 2.3 percent of all advertising.

Mr. Jeff Weiner, who runs Yahoo’s search unit, said that there would be a series of improvements to the search system in coming months. Many of them take advantage of its data about users.

“Personalization will ultimately change the way search is delivered,” Mr. Weiner said. In particular, he hopes that by watching users over time, the search engine can guess what sort of information they are looking for – or, as he put it, “If you type in flowers, do you want to buy flowers, plant flowers or see pictures of flowers?”

Another plan is to create search systems for Yahoo’s specialized areas, like finance, jobs and travel. Last fall, the company introduced a highly regarded search service in its shopping channel that lets users specify prices, brands and product attributes. Each specialized search engine, of course, also creates opportunities for specialized advertising.

The biggest new advertising opportunity is in searches related to merchants and other information in a local area. Yellow-pages advertising is a huge market that has yet to move online, and both Yahoo and Google see local search as their way to claim their share. Mr. Weiner says Yahoo should have an advantage because it already has address information for many users.

One of the things I like about the new Yahoo search: its inclusion of the RSS URL where the feed is available, and the ability to add the feed directly to My Yahoo. Jenny Levine has more.

Adds Red Herring:

  • It forces Yahoo! back on its historic business model, as a search-centric company, at the very time that CEO Terry Semel has demonstrated that its content and community services, which drive more traditional retail banner advertising, and;

  • Google’s business, by contrast, is blossoming by segmenting audiences around different faces of searchfrom finding information that drives AdWords revenue to community services like Blogger and Orkut that could deliver increasingly targeted AdWords inventory and, even, retail banner advertising.

    Both companies, then, have embarked on a course where they will become increasingly integrated media companies. They will need to pursue new technology development and acquisitions in areas of, for example, blog search, where companies like Technorati and Feedster are already taking leading roles, and growing their search inventories to support specific lines of business, like Google’s Froogle and Yahoo!’s Shopping services. All of these business issues are solved at higher costs than acting as a conduit for other companies’ content, which suggests that Yahoo! more than search-centric Google faces increased operating costs in the short term.

  • Robert Scoble thinks (and I agree) Yahoo missed an opportunity to overtake Google – being nearly as good is not enough. He has some suggestions:

    I’ve done a few dozen more Yahoo vs. Google comparisons. I’m convinced that Yahoo squandered a good chance to overtake Google. Here’s my view on how to overtake Google:

    Give users access to the variables.

    What do I mean? At O’Reilly’s ETCon two weeks ago I saw Google’s Nelson Minar, Google’s senior software engineer speak. He told us that Google tracks 100 variables that they can play with to move around results.

    It’s clear that Yahoo has something like the same kinds of variables. Yahoo, for instance, clearly ranks individual’s sites (er, weblogs) lower than Google does.

    What if the user had control of that? I want a search engine that lets me control the variables. I might never want to see any results with webloggers included. I might want to have results that have only webloggers included (yeah, today I could use Feedster for that). But, what about the other variables?

    A search engine that would let me control the variables would be instantly the one I’d use. Imagine if you could use such an engine via a web service? I could display results here. That kind of engine would instantly be the geek’s favorite. Why? Cause they could tweak it to give better results.

    Even better, why not provide hooks into such an engine so we could come up with new variables that would provide even stronger results?

    Anyway, Yahoo will keep its current market share (which is sizeable) but won’t convince many people to switch with its current engine. Why? Cause it is isn’t demonstratably better.

    I think it’s possible to make a search engine that +is+ demonstratably better. And, no, I haven’t seen MSN’s engine yet. I doubt it’ll give users the kind of control over variables that I’m asking for too.

    I think the innovators will be the small engines like Technorati and Feedster. It’ll be interesting to see if any of those open up their variable tables for us to play with.

    Published by

    Rajesh Jain

    An Entrepreneur based in Mumbai, India.