Yahoo will re-org

This is pretty big news. In a press release entitled “Yahoo! Re-Aligns Organization to More Effectively Focus on Key Customer Segments and Capture Future Growth Opportunities”, we learn that Yahoo will undergo a re-org. The press release opens with:

Yahoo! Inc., a leading global Internet company, today announced a reorganization of its structure and management to align its operations with its key customer segments — audiences, advertisers and publishers — and more effectively leverage Yahoo!’s significant strengths to capture future opportunities for growth.

Dude, that was all one sentence. Sounds like Lloyd Braun and Dan Rosensweig will be leaving, and Yahoo will form three main groups: audience, advertiser/publisher, and technology. I’m not sure whether search would fall under the audience group or the technology group.

You might not know this about me, although you could probably guess: I love to debate strategy in the search industry and to play armchair quarterback. But I try to keep all that speculation completely within the walls of Google. This announcement will give me food for thought for several days.

What do you think? Will this distract Yahoo for a while? Will it make them a more focused competitor? Both?

50 Responses to Yahoo will re-org (Leave a comment)

  1. Well i personally believe this will distract yahoo for a while.. Its been fairly obvious to everyone that they’ve not been doing their best of late.. and i guess this just shows how trully bad things have got.. I just hope they do get back on track.. I’m a google man but competition doesn’t hurt any1

  2. Ian

    How is Google broken down then? Does it have a similar split of, for example, search and ads?

    I think web-y companies need to be careful not to split things up where there are important links between the areas of the company, but to me, it looks like it’s a fairly logical split. The only worry here I would have would be where one product is split between multiple departments (like basic web search which fits all three quite fully), ensuring that there is (1) no duplication of work and (2) enough communication between them.

  3. Ian

    And where does sitematch fit in? In technology, with web search, or in adverts? ;)

  4. Ian

    Reading the article a bit more (it’s a tad dull really), I don’t know if Yahoo! are likely to be distracted by it for long. They say they plan to finish it end Q1 2007.

  5. Ian, all I worry about is search quality and webspam. And a little bit on communications. There’s also people that work on ads, and, um, there’s other people too. I’m loathe to disclose our organizational breakdown, lest competitors steal the ideas and organize *their* company in the same way. ;)

  6. Tom

    I think they will use their PPC skills to reinvent the wheel, this time with less rounded edges.

  7. I think this is just what yahoo. Too long has it not being able to improve on already working projects instead of creating more and more. This way each section can handle their own and everyone can handle their own problems with eating up precious time.

    Thank You

  8. Yes, it’s really a big news [in length too ;) ]. It seems that Y! has woke up fully and will stay wide awake until the Q1, 07.

  9. I’m thinking it’s going to help them long term, but it’s going to be early ’08 at the soonest that we start to see this pay off for them. When you think about it, having different focuses is a logical progression for any company of this size.

    However, they’ve grown very large before doing it, and one can only think that it’ll be like watching a rugby prop forward trying to do contortion – painful, slow and not pretty to watch.

    Once it’s all sorted and the spanners have clunked their way through the works, Yahoo! could well turn out to be what it’s always tried to be – the ultimate portal site. Will it work? Well, we’ll just have to wait and see…

  10. What is really being said is that – Yahoo can not compete in Organic Search – and will therefore focus in the areas that they ARE more successful or see as a giant moneymaking trend:

    — Social Sites with Web 2.0 Ajax Flavors

    — Expanding Search Engine Advertising/ Marketing to include other traditional media

    — Personalization (requiring a sign on of all their Services and using profile to offer more focused Advertising

  11. Companies eventually reach a critical mass point that requires a reorganization. The problem is that reorgs often lead to more reorgs as the different parts of the company fight and compete with each other. Think of a binary star system where each star is sucking matter from the other in order to feed itself. From all I’ve been to gather, Google is trying hard not to become a reorg-driven company, so I doubt you’ll this kind of announcement from them anytime soon.

  12. Yahoo! could get greedy and have more private parties so their search engine would become even easier to hit with an SMO hammer to get rank.

    Maybe they are counting on Google to keep offering free stuff like the sitemaps protocol to keep their search engine at least usable while they focus on cashing in?

    Greed

  13. BillyS

    With the rapid expansion of the industry, it’s alway good to take a step back and evaluate if the way you’re organized supports the companies growth and overall objectives.

    Reallocation of existing resources – no matter how small – ususally results in a short term inefficiency. As folks work through the learning curve (and politics) things should eventually improve.

    It’s my belief that companies should really go through this exercise more frequently than they do (they avoid it because of the disruption). But I’d argue that a disruption occurs because you’ve delayed organizing your company the way it should be and the necessary changes are much bigger (and more disruptive) when they eventually occur.

  14. I think Yahoo knows it has to focus more. For several weeks there have been speculations of a re-org. To me it seems like Yahoo is stuck in the past and doesn’t really know what it wants to be – that’s probably the worst thing when you own a business, big or small.

    They should decide either to focus on being a portal with communities ou a search engine with spin off products, like Google.

  15. mrg

    I think what is really being said may not even be in the article at all. By focusing on the areas mentioned they could give search their own twist and perhaps make results rely more upon users’ choices. The fact that search is not being mentioned doesn’t mean that is not being considered. In fact, it could be at the center of their strategy and be the primary motivator.

    If they are correct, Google can be blindsided.

  16. AJ Smith

    Google’s strategy is burn money on 70% of their projects and throw them out for the 30% (per M. Mayer). In that regard Yahoo is way ahead and more mature. Google is ONLY living on its ads via search engine, everything else is a weak, poor competitor. Yahoo still has a great opportunity. Perhaps when they combine with MSN the Monopoly known as Google may actually give consumers (and advertisers) a real choice?

  17. Ian: I was wondering the same thing after reading the release last night. Where the heck did they put search? I’m guessing it isn’t a priority for them, I can’t recall when it ever was.

    Matt: I really think Yahoo should pay more attention to the changes happening at live.com rather than Google at this point in time. My site numbers on all my client sites are hitting harder with live.com for more relative keywords than yahoo (within the past 30 days.)

  18. I’m with (SearcH EngineS WeB), it seems most of the article keeps referring back to being customer-centric. This is the approach they already provide in their services, but I think by focusing more on personalization services and advertising being done the same way, they hope to capture the market and keep them coming back for repeat service. I don’t know about the search though, but I would guess they try to incorporate that same philosophy there as well.

  19. Dan

    I don’t know if this will change much of anything. Reorgs at Yahoo! are so common they are part of the corporate culture. When I worked there, we seemed to have a reorg every 6-9 months.

  20. Google has built their empire based around advertising revenue. Its amazing that Yahoo has not followed in the footsteps at least to somewhat to the same degree. They are working on YPN but how long will that stay in beta? Its interesting to see Google expand into markets due to growth, ie. goog docs, gmail, google talk, etc. Yahoo is now back tracking trying to refocus on their “three main groups”. The question is will Google start spreading peanut butter like Yahoo, or will they remain a focused company per their mission statement?

  21. I really hope this makes them more focused. I can’t bear another year of advertising on their sub-par platform with their sub-par service for sub-par results. If it ditracts them, I guess I can just expect more of the same.

  22. Lani… it’s going to continue to grow in the Live.com category too as millions of new computer users buy Vista computers that default their search to Live.com

  23. Jeff

    I can’t imagine Yahoo possibly leaving search behind. There’s no way. It’s core to their strategy. Here is a quote from Terry Semel in the article (where he agrees with me :)

    ’The Internet is continuing to grow and evolve at a rapid pace…our strategy capitalizes on big emerging trends and leverages our core strengths in search, media, communities and communications.’

    Google dominates search and is already into “big emerging trends”. Microsoft has released IE7 along with numerous desktop/search features that come packaged with the usual hard core ramifications. With apologies to my softy friends, if anything, Microsoft’s modus operandi has intensified: “if you can’t pull the customers in, push the competitors out”. And live.com is officially off the “ignore” list.

    This all adds up to a new day and age starting right about now. If Yahoo can’t figure out how to put their solution together into a tight value package, they’ll be the odd man out. Shares will be sold.

    On a final note, all the talk about social content is all well and good but there is a huge market that controls a whole bunch of money not watching YouTube videos or posting junk on MySpace. These are business people who want fast, accurate, information they can use. They want answers. They want tools. If you can turn YouTube into a tool that business people, marketers, etc., can use (and I know you can), they’ll be all over it. I think this is why Yahoo is digging around for clues…like the old Leonard Nemoy show… In SEARCH Of…

    All I want for Christmas is for junk email to go away!

  24. Yahoo is going through what I call corporate menopause. They got complacent at the very same time that Google was busy innovating.

    Yahoo made things worse when they made it impossible for webmasters to communicate with them. Google exceeds because they communicate with webmasters. Yahoo fails because they don’t communicate with webmasters and they have not shown any evolution or strives to innovate.

    If you own Yahoo stock, sell it. Google has so much momentum I don’t see how Yahoo can ever catch up. Game over.

  25. If you enjoy strategy then you enjoy discussing competitive advantages. In search I would argue there are no positional advantages, everyone has the same WWW to compete with, so you have to think about other things like patents. (You could argue the yahoo.com domain is a positional advantage but….)

    If the switches reflect some type of new resource R&D has come up with (fancy new algos,) then the move makes sense. Otherwise, it’s just another smoke screen from a company flailing the arms making changes for reasons they aren’t too sure of.

  26. Barry: I agree, however all window’s systems come default with MSN. Some people don’t ever bother to change it, but would rather use it to locate Yahoo or Google. I giggle at my clients who type in http://www.google.com and use their address bar to locate the google url (but such is the general public.)

    Joel: who the heck has stock on yahoo? Now stock in Yahoo Answers may be valuable.. (tip?)

    The really strange thing, is at PubCon I had like 20 minutes with a guy who was part of local search team for Yahoo. I gave him some ideas on gaining some quality local listings and he blew me off saying I should wait until the new yahoo stuff comes out. I’m still waiting and still nothing – meanwhile Live launches the Mobile Maps – an idea I think google should implement as well – mobile GPS that’s easy to install is so yummy. My Yahoo idea? Make it easy to go local, front page sign up for local business owners who know nothing will gain more usable local information. Google should do the same.. make local search easier to update and find on Google.

  27. Lani, you should check out http://www.google.com/local/add . It’s our local business center, and I was just putting some polishing touches on a post about it this morning. I’ll talk more about it this week, I think.

    You might also check out Google Maps for mobile phones at http://www.google.com/gmm/index.html as well.

  28. This seems to be a strong message that they’re not as competitive with Google as they’d like to be in the search department.

    I think they’re realizing that if they don’t do something soon to be more competitive they won’t be a player in 5 years in the search engine market.

  29. Yahoo’s shooting wildly in my view, indicating how out of touch their leadership is with where things are and where they are going. (I’m a Yahoo Shareholder and I’m pissed).

    Google’s strong suit = high focus on the PPC Honeypot and superb matching of context. IMHO Yahoo has a simple solution, which is allow publishers to target ads themselves until their matching improves. Add rigid anti “made for adsense/PPC” policing and a higher payout to this and they’d attract a lot of legitimate publishers quickly.

    (Unrelated) Google Maps server/people needed to help organize the IKONOS Satellite data coming in on James Kim Search about 1-3pm today. What a great use of the collective intelligence of the community to review this for clues.

  30. This is just classic lip service. Yahoo’s growth has slowed, so they are feeling pressure from investors to “do something.” So they are claiming to do something, but will it really be that much of a change? They probably did need to get rid of some management — this is usually healthy for every company to do on a regular basis. Maybe they will try to consolidate some of their properties, but that would be a natural thing to do over time as well. Mostly this will just get investors off their back for awhile. If their growth continues to slow, they will probably have to lay off people to cut costs (even though they are profitable.) Googlers should take notice of this — it will happen to Google too one day.

  31. John A. Davis

    All I want for Christmas is a Google map that downloads quick. Just one square of a map, zoomed in to just the right size for my needs.

  32. Matt: Make it easier for local businesses to add their listings, is what I’m pushing at. When I use local search, there isn’t a way for me to add listings without first knowing “how to” and the how to is no where to be found in the local serps.

    I find google’s communication with webmasters excellent, but I recall my first time with Google Local, I had no idea how to add my listing or to edit it without first finding a webmaster world thread. On the main maps.google.com page there is a link for local businesses to add their listing, but on the actual results for local listings there isn’t any support. I use Google Local, but I would truly benefit as a google user if more local businesses could easily navigate the “how to update their listing” feature. Google does great work communicating with webmasters’, lets get some support for the general public too :)

    Kudos on google mobile – another example.. how is it I didn’t know? I knew about live.com’s mobile push, but not google’s. I’m so out of touch :( imagine the general public. (Drama!)

    looking forward to the google local post!

  33. (unrelated) James Kim found but may not be alive. Reports are just coming in now.

  34. Wow, I have to say sorry for my last comment in here, I really do not think Yahoo! sucks that bad. My concern is for the future “privitizing” of the net. Seems like Yahoo is looking to round up marketers like cattle and wine and dine them, that is, as long as they can bring in the funds.

    Damn right they need to separate and protect search or it will be worth no more than self serving content spam.

    Ever try to rank in Yahoo! without doing all the things considered spam?

    Nuff said!

  35. Harith

    What I find most interesting in all this is; what will be Google next move?
    I can’t imagine the folks at the plex just sit back and enjoy reding Yahoo latest news ;)

    Maybe they are already considering improvements and vitalizations of the following:

    Part-I

    - More stable serps (less data push, data refresh and bad data push).

    - Better spam fighting including new areas.

    - Speedy response to spam reports.

    - Be more clear and specific in communicating technical matters related to updates and changes in infrastructure.

    - Matt to leave USA and meet us in Europe :)

  36. Having been through a few corporate reorganizations, I think “distract” might not be the right term. It’s distraction and lack of focus that got them where they are now: second tier and falling.

    Reorgs can go a couple ways: if a company is serious, and smart enough they can change everything. To do that will take several years and a willingness to completely abandon a lot of projects and concepts. Be realistic and identify core strengths; then kill or source all the rest. In this case, a reorg will focus a company, not distract.

    The other 90% of public companies are spineless and unwilling to deal with their stockholders, and have lost the ability to see what their company really is good at. Generally speaking these are the same characteristics that got them there. In this case a reorg will feed the cancer they are trying to eradicate.

    Not that I’m cynical about public corporations, or anything…

  37. Wayne

    Short and sweet I think this just opens the door for a takeover of Yahoo. Whether Ask or MSN takes the bait who knows.

  38. Although I rely on Google quite heavily its wise to keep your fingers in many pies in this regard. I certainly hope Yahoo rebuild and become a mighty empire. Competition like this keeps things in perspective.

  39. In the future there will be only ONE search algorithm and it will be Google, Yahoo and MSN will borrow from the mothership as they branch out into other areas they are better at serving.

    Google will also eventually become the ATM of the world and instead of dividing it will bring people together. Google will be forced to create it’s own internal religion to protect it’s righteous black box. ;o)

  40. Matt, if Aaron Pratt’s right about his “One Algo to Rule them All!” theory then you’ve got your Halloween costume for next year ….. Gollum!

  41. I’ll vote for “distracted.”

    I’m also going to be the first person to ask this openly: does anyone know what the hell Yahoo! is actually saying in this press release?

    More importantly, are they actually TRYING to say something substantial or are they just spitting out corporate rhetoric?

    The title of the thing is almost a paragraph by itself!!!

    This looks to me like something that is designed to please corporate-types and shareholders rather than provide anything of real benefit or use. It’ll take at least 6-8 months just to try and figure out what this thing is supposed to mean, and even then it’ll be interpreted 8 ways from Sunday.

    This is nothing more than blivet. Pure, unadulterated blivet.

    “Here is your winner…and STILL Search Engine Heavyweight Champion…Goooooooooooooooooooooooooooogllllllllllllllllllllllllllle!!!!!”

  42. Sometimes, you reach the peak. And, you can longer get bigger. Re-org happens. I’m not sure if somebody uses Yahoo anymore. They took a dive for some reason.

  43. This should create some distraction initially. Since this is involving the senior management of Yahoo including Jerry Yang, we can assume that the initial distraction should be take care of.

  44. Harith, I am sending my best spam person to Europe for six months in 2007.

  45. I hope that they will speed up there efforts in the process, there technology is massively slow and inadequate compared to the way Google, and not just in search. Good example is compare there Yahoo! Site Explorer service to Google Sitemaps … terrible, speed is ridiculously slow.

    Yahoo! has always fitted the profile to challenge Google it just seems they have never lived up to the billing… (Nor do I ever expect them to based on history)

  46. Lemmybrown

    Yahoo may or may not turn it around. They have an interesting experiment running http://mindset.research.yahoo.com/. The public don’t know anything about algorithms, they’ll take to anything that gives them what they want as quickly as possible (meaning they want fast, relevant search results). I remember when Google was becoming popular, most people talked about the simple interface more than any technical reason.

    The web 3.0 concept of a deeper understanding of the words people use to search is being developed, probably, by all search companies large and small.
    Whoever gets their new search tool into the public eye fastest will succeed (as long as it really works). It wasn’t long ago that Google was tiny. There are many small enterprises working now towards becoming the next Google.

  47. Harith

    Matt

    “Harith, I am sending my best spam person to Europe for six months in 2007″

    Very nice to hear that. And it might signal that WebSpam Team is still paying attention to “European-Spam” :)

  48. Oh, we absolutely are, Harith. If anything, our focus will sharpen on European spam in 2007. I’m looking forward to it very much. :)

  49. I like to debate Internet strategy too Matt, mayeb we shoudl debate?

  50. ed

    yahoo getting a reorganization is no suprise to me. More development is required!

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