Yahoo Gets Tough

Scott Lambert

For the past four years Yahoo has pursued a strategy of friendliness and cooperation, allowing people who wanted to access its search and other services to login using their Facebook or Google accounts. Now this is going to change. In what Yahoo describes as an attempt to “offer the best personalized experience to everyone”, it is gradually finishing with the shared access agreement and is requiring users to sign up for Yahoo accounts if they want to keep getting the goods.

When put in place by former CEO Carol Bartz, the sharing arrangement was intended to attract more users to Yahoo by making logging in easier for them and letting them continue to do this through services they trusted. The price, however, was that Facebook and Google were able to collect information about what users were doing there, adding to their marketing databases while Yahoo gained nothing with unique value. Over time, as marketing models have shifted, this information has become more and more valuable and Yahoo has been left in a vulnerable position.

Two other major problems have presented themselves. Firstly, because of the lack of a distinctive login, some users have not even noticed Yahoo’s branding when visiting its sites; therefore, vital awareness of its reach and relevance has been lost. Secondly, Yahoo has been unable to personalize and target its services and the ads it sells, as others have done. In a market that now hinges on offering personally tailored services, this is a significant disadvantage; therefore, it is no surprise that Yahoo finally chose to do something about it. The question is, is it too late?

Bringing in the change slowly will provide Yahoo with some stability during a period when it may lose some custom as people decide it is too much trouble to adjust. In the long term the move will mark it out as something distinct from the many online games, newspapers and blog sites that allow people to log in using the big players’ systems. To get into the game at this level, Yahoo will need to innovate and ensure that it can provide services that users see as worth the extra effort; if it can do so, and avoid losing too much market share, what it has to offer advertisers should improve significantly. Many marketers would welcome the extra competition this could generate, potentially raising standards and lowering prices whichever company they ultimately choose to advertise with.

Topics: Social Media