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Counting the cost for Yahoo!

Tanya Goodin
Tanya Goodin
CEO
7 August 2008

Yahoo
Goodness Yahoo! is in a mess isn’t it? Having thought that he’d scraped through a shareholders’ vote of confidence Jerry Yang now finds that a recount of the votes cast against him has been demanded by one of the group’s biggest shareholders  – egged on by billionaire and corporate raider Carl Ichan who thinks Yang is the wrong man for the job. It now transpires that 33% of the shareholders voted against Yang rather than the 14% originally reported. Looking at Yahoo!’s dismal performance recently you can hardly blame them. Yahoo! recently announced that income had fallen 18% in Q2 after rejecting Microsoft’s $47.5bn takeover offer.

Were did it all go wrong for Yahoo!? They had a head start on Google launching 4 years earlier in 1994 and for a while had an early-to-market advantage. But Yahoo! lost its way by trying to be all things to all people and the portal idea distracted them from their core business of search relevancy. Their search page quickly began to look cluttered and confusing as they tried to cram as much onto the screen as possible, whereas Google went for a sparse, almost asexual, appearance and – most importantly – focused on the technology to improve their results.

Google’s search results and relevancy have always been better than Yahoo! and once users knew this they deserted Yahoo! in droves. Latest UK stats show 88% of users use Google as their main search engine compared to a dwindling 4% for Yahoo!

Yahoo! should have taken advantage of Microsoft’s panic to compete in the search market against Google and accepted what now seems an overly-generous offer. It looks like the only way is down now for Yang and his team.

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