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Yahoo!CaseAnalysis
May 9
2007 
The strategy of implementation of an established dot com company, strugglingto leverage current advertising methods with business objectives.
Jason DrohnBradley BiererCarol WoodsMichelle VictoryPaul Rapela
 
 
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Table of Contents
Executive Summary ......................................................................................................................... 3History: ............................................................................................................................................ 5Problem ........................................................................................................................................... 7Competitive Analysis ....................................................................................................................... 9Yahoo Financials ............................................................................................................................ 12Economics ..................................................................................................................................... 19Demographics ............................................................................................................................... 23Market Analysis ............................................................................................................................. 30CPM ............................................................................................................................................... 34SWOT MATRIX: .............................................................................................................................. 36QSPM............................................................................................................................................. 38Space Matrix ................................................................................................................................. 39Strategic Issues.............................................................................................................................. 42Strategy Implementation .............................................................................................................. 47
 
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Executive Summary
Yahoo has grown up as a portal company. They learned early on that by being sticky, byhaving a web presence that forced users to stay on their site, they could find ways to profitfrom the page views. This has led Yahoo astray though. Not only has Yahoo given up overallprofits in search of ever expanding user acquisition, they have allowed their search product tofall behind.
Google, Yahoo’s chief competitor, has mastered the art of monetization, namely
through contextual advertising. Contextual advertising is when a small piece of programmingcode is inserted into web pages which actually interprets the text and serves advertising based
on keywords. Google’s offering, Adsense and Adwords, produces 99% of the company’s profits.
This advertising network is built into both their search and branded sites. Web publishers arealso growing to adopt
Google’s version of website advertising to gain monetization for their
own traffic.Yahoo has adopted this model of contextual advertising that has been so profitable forGoogle, but have yet to refine it enough to make a serious impact on the market. The program
is still in beta (the internet’s way of saying under
-construction) and has not made any headwayat attracting new publishers or advertisers.The primary disconnect in the Yahoo model has been the lack of precision, because theirsearch algorithm needs to be updated. The ad network fails to interpret that an article iswritten about cars, and serves ads about entrepreneurs. Money is only made if a user clicks onthe advertisements. This is an interesting dilemma.
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