Yesterday Yahoo released its first quarterly earnings under CEO (and former Google executive) Marissa Mayer. Revenues showed modest growth and beat expectations, which was a nice start for Mayer.
During the earnings call she indicated strong support for mobile initiatives going forward. Mayer described where she was going to place strategic bets:
So again, that strategy is focusing on the daily habits of Mail, Search, Homepage, Mobile; continuing to invest and really rejuvenating our investment in the key verticals where we already have a leadership position: Finance, Sports, News, Flickr, many of those; and really getting very focused on the shift to mobile.
This sounds similar to the approach taken by former CEO Carol Bartz: focus on where Yahoo is already winning. One major omission in Mayer’s strategy is local.
Coming from Google Mayer knows how resource-intensive local is and she obviously made the decision that Yahoo can’t compete in the segment without huge new investment that the company can’t or doesn’t want to make. Here’s what she said about local:
In terms of the question around local, it is something I’ve spent a lot of time working on and I really do love and I’m very compelled by. With that said, I also have a deep respect for it, but it’s very hard to do it well. It requires a deep investment, a lot of people, a lot of energy and time to build terrific listings. We have some offerings in the space already, including Yahoo! Small to Medium Business offerings, where we host websites and stores. We also have Yahoo! Maps, where we have licenses in place to support that. So I think that our local offerings are good at the moment. I think it’s hard to take that next step to provide even deeper functionality. And so, while we don’t intend to make significant changes there in the short term, I do think that it’s probably not an area where we’re going to invest heavily moving forward.
This is obviously a disappointment to everyone who thought Mayer would help revitalize local at Yahoo. (It also indicates she won’t be buying Foursquare.) By contrast, Mayer is putting major emphasis on mobile delivery of content going forward:
I think that it’s clear that at some point in the near future, Yahoo! will have to be a predominantly mobile company, which means that at least 1/2 of our workforce, our technical workforce, should be working on mobile.
Mayer also thinks Yahoo can be a significant force in mobile search: “I think that there is going to be a few large players in the mobile search space, and I think that Yahoo! should absolutely be one of them.” But without a compelling local offering can Yahoo really compete in mobile search or mobile more generally?
The answer is “yes and no.”
More and more mobile devices are simply alternatives to the PC. In that sense Yahoo doesn’t necessarily need to be a leader in local. People will access Yahoo news, sports, finance, mail and so on through smartphones and tablets irrespective of whether Yahoo has good local properties. Mayer is also correct that doing local well requires considerable money and effort. Yet there are probably ways to make selected investments to bolster the local experience on mobile devices that don’t require massive resources.
In the end, neglecting local may compromise Yahoo’s broader mobile ambitions. As I’ve written, 40% to 50% of mobile search queries carry a local intent. And if Yahoo simply “coasts” on local it’s not clear that it will be able gain traction as a mobile search destination.
In fact, I would almost guarantee that it cannot.
See related: Yahoo Probably Compelled to Buy a Mobile Ad Network