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Yahoo! & AOL get compared to Google, but should probably fear Facebook

by drm on May 3, 2010

Yahoo! chief Carol Bartz made an interesting point about Google in an interview with the BBC today:

“Google is going to have a problem because Google is only known for search,” said Ms Bartz. “It is only half our business; it’s 99.9% of their business. They’ve got to find other things to do.  Google has to grow a company the size of Yahoo every year to be interesting.”

yahoo_logo.jpgPeople are going to focus on the bravado and positioning — after all Bartz needs to clearly define Yahoo’s value proposition in a market where the company is unfavorably compared with Google on an ongoing basis.

Search isn’t an infinitely expanding business opportunity. In fact, several dynamics at work suggest that the growth of search revenue will slow, limiting Google’s overall opportunity for growth. First, penetration of potential advertisers is higher today than it was two years ago for Google. And second, the shift of internet usage into social networks has incrementally changed the search behavior of web users.

Google’s media proposition is built on the back of search. That means that the audience that Google aggregates to the benefit of marketers — a basic definition of ad-supported media — relies to an outsized degree on search traffic.

Yahoo! has a more diverse media proposition. That’s the “half of our business” that Bart is referring to.

In this regard, Yahoo! is more like AOL than Google. Not surprisingly, AOL is facing its own challenges in terms of definition, value and opportunity.

The big issue here is that the largest diversified web media brands aren’t demonstrating the ability to grow revenues and hold on to consumers that suggest the franchises deserve premium growth valuations.

Yahoo! and AOL are predominantly content-driven media platforms that have created applications in order to enhance user engagement. That business model is an interactive evolution of the traditional media business model. new AOL logoIn this regard, the companies are very different, and have very different challenges, from Google.

The primary challenge remains how to effectively keep content and applications fresh while managing a huge consumer audience, and how to make that base of content accessible and valuable to advertisers. The problem solving is discrete, because one approach doesn’t necessarily fit to every different content platform and user experience. (In this respect, the companies suffer in comparison to Google, which is incredibly simple to explain.)  An underlying question is whether focused media brands are more viable than diversified media brands.

When thinking about the strategic challenge of Yahoo! and AOL, I’d suggest that the most salient question is how these two platforms retain consumer interest and loyalty in an environment where Facebook is becoming a de facto operating internet operating system.

One of the Google searches that drives traffic to this site regularly is “Is Facebook the new AOL.”

The query could just as easily be, Is Facebook the new interactive media model? As an interactive media platform, Facebook is organizing and directing shared content, providing content publishing tools, generating scale audience with a high definition of individual interests and producing content within its own operating system seamlessly.

Facebook allows users to dictate what content is important and interesting.  That model is fundamentally different from the Yahoo!/AOL model.

Facebook can be an incredibly valuable tool for anyone trying to generate a business from content, and it could ultimately be a profound disintermediator for Yahoo! and AOL, which today look like legacy media brands on the web.

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Thinking about how Social Media gets defined and what it means

by drm on January 7, 2010

Brian Solis wrote a reflective post today that strayed from his typical forward-looking perspective to reflect on how the term “Social Media” has morphed to encompass all kinds of web activity.

He harkens back to a definition of social media that was developed by a group of leading thinkers a couple of years ago. That definition focused in its short version on the idea of conversation.

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The landscape has changed markedly since Solis’ group developed their seminal definition. What is striking is the degree to which the concept of conversation has remained at the core of many people’s definition of social media and infiltrated the idea of how marketing should develop in the space.

When you take the perspective that social media is a set of tools then conversation becomes one part of a broad spectrum of different opportunities. New media companies have created vibrant communities by integrating different parts of the social media toolkit. Facebook, for instance, is a media property that combines different social media tools, such as photo uploading, video uploading, commenting, e-mail, messaging and micro-blogging, into a common interface that is easy for consumers to use.

I often compare AOL and Facebook, because the initial purpose of both services was to aggregate communities and create connections. AOL drove its product development towards a focus on content publishing from media partners; Facebook drove its development towards building easy-to-use content creation and networking tools.

For a business that wants to intersect with consumers online in a dynamic fashion, incorporating social media tools into the marketing process is essential. Each of the tools requires a different set of skills and processes. Starting a conversation with the market is ONE of the things that social media tools make possible. But even without engaging in conversations, businesses can bolster their marketing by changing the way that they create and distribute marketing content, turning the marketing dialogue into an ongoing series of information exchanges rather than one-time marketing events.

Social media tools have moved Content to the forefront of any marketing process. These tools have changed how Media has to think about the process for building content and audience. Solis is on target when he talks about social media become the essence of new media. It’s even bigger than that: Social media tools have the potential to force change in the structure and process of organizations on the scale that the introduction of the personal computer did.

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10 years past, 10 years forward

December 23, 2009

10 doesn’t sound like a big number, but when you start looking back over a decade, 10 years of an ever-expanding and innovating world, 10 years feels huge and unwieldy.
At the beginning of this past decade (the first decade of the 21th Century…how cool!) I was working with an Internet company called Themestream, started by [...]

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What can you learn from the statement “Facebook is the new AOL?”

December 8, 2009

MarketingProfs today has an interesting post from Leigh Duncan-Durst, a 20-year veteran of internet marketing and e-commerce, about some of the likely challenges Facebook will face as it develops its platform in order to be more relevant for marketers.
Do the math on 20 years: that puts Duncan-Durst in the interactive world in 1989. [...]

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Some highlights from Move.com’s earnings call

August 6, 2009

Move.com is the 10,000 pound gorilla in the real estate internet market, and the long-time player has been making a number of changes under the leadership of new CEO Steve Berkowitz. The company’s quarterly earnings call is a good opportunity to check in with the direction of their strategy and to assess the potential [...]

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Simplify things too much and you’ll make mistakes

February 24, 2009

Real estate agent marketing needs to work for the entire market, not just a small section: Don’t make the problem too simple and hurt your business long-term

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