Yahoo’s Mayer Bets on Mobile, Bails on Local

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.

(Emphasis added.)

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

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25 Responses to “Yahoo’s Mayer Bets on Mobile, Bails on Local”

  1. Dave says at

    Thanks, Greg: Those are both interesting and insightful comments from one who knows better, and has been in the trenches, with regard to local. The comments about investing in local to build quality are very revealing.

    I’ve been one of the close followers of local over the long term, focus on it for small businesses and been a voice that at various times “bitches” about the issues with local, primarily as we see them from google. With regard to the investment aspect, that is probably key to the issues that arose with the new Apple maps for mobile and the many complaints. It requires a large investment to get it thorough and correct.

    I have no idea of the scope of investment needed by the large providers of local info like google, yahoo, apple, etc. I do know our smb’s that carry adwords and other web vehicles spend an ever larger amount of money on those services. Its creeping price escalation.

    I would love to see some info on what google or bing has spent in terms of manpower and engineering power on local, vis a vis other services/products.

    With google having endless local problems over many years, it would be helpful to know what all that adwords spend is going to.

  2. Greg says at

    Dave: if you consider maps to be a proxy for local more generally …. Google has spent literally hundreds of millions of dollars over the years on building maps and improving the quality of the local data.

  3. Dave says at

    Hundreds of Millions over the years??? Well that could explain it. Yahoo’s most recent quarterly report saw a little over $1 billion in revenues. Google’s most recent quarterly report saw about $11.5 billion in revenues for Google (not including Motorola).

    Marissa Meyer has more in depth understanding of this issue than just about anyone outside of Google, on all aspects, including the cost side. She has probably decided Yahoo doesn’t have the resources to spare to invest in the issue.

    And suppose one search engine (other than google) had the “best” local info (most accurate, most up to date, most compelling with important details, etc.).

    In its own right that does not mean that users will flock to that search engine for uniquely local searches. Its also a huge job to get those eyeballs.

    But Hundreds of Millions!!!! I’ll say one thing, Greg….if you follow the Google Local forum for business owners, with its myriads of problems and unsolved issues, lost data, and incredibly frustrated SMB’s…along with periodic claims from google that the scope of problems has overwhelmed the staff….one would imagine google hasn’t spent a buck on the place!!!!

    I wonder where all that money goes???

  4. Malcolm says at

    Investment shouldn’t be a hurdle for Yahoo, especially if they’re smart. Eg, they would spend a lot less than Google has spent on Maps if they focused on UGC driven by social apps. 

  5. Andrew Shotland says at

    I had two reactions when I saw Meyer take a pass on Local:

    1. Wouldn’t be surprised to see some kind of big “anchor tenancy” deal where Yahoo basically sells off powering Yahoo Local to a big player (e.g. Yelp, YP.com, etc.).  I think they already have a big ad deal with YP.com?

    2. Steve Jobs famously said that no one wants to watch video on a iPod…

  6. Greg says at

    Andrew: if Mayer pursued option 1 that would be consistent with what Bartz did earlier in outsourcing most of the vertical content at yahoo.

  7. Andrew Shotland says at

    On the other hand, Yahoo Local could pretty much run on auto-pilot and collect checks for a while.  I wouldn’t be surprised if they could run that product with a very small team. 

  8. Greg says at

    Yes, but my point is that if they neglect YL it will have some negative implications for their mobile search strategy.

  9. Greg says at

    Malcolm: if investment isn’t a hurdle for Yahoo then why are they hesitating? It’s a critical area especially when you consider they want to be a mobile search/mobile first company.

  10. Andrew Shotland says at

    Maybe, maybe not.  If you think of mobile in the vein of finding businesses, directions, local commerce, etc, then you’re correct.  But Instagram had nothing like that.

    ESPN doesn’t have a local search play per se – outside of perhaps finding tickets/directions to the stadium/weather for the game, etc – but they probably have a great mobile strategy.

    If they execute on making some great mobile products, they don’t have to necessarily do much with what we all think of as “local search”.  Sure, it’s a missed opportunity and it handicaps them when competing with big players that have it, but they’ll probably get a lot more mileage out of a couple of breakout mobile apps.

  11. Malcolm says at

    Greg: I’m saying it shouldn’t be a problem if they focus on low-cost user-generated content. Google spends a fortune on maps because they have to generate the content the rest of us consume.

  12. Greg says at

    I agree that there are ways to generate local content more inexpensively.

  13. Greg says at

    As I say above, in agreement with your comment, they can do mobile without doing local. But they really can’t expect to do mobile search w/o local.

  14. Andrew Shotland says at

    I wasn’t paying attention to the announcement, but your quotes mention “mobile”, but I don’t see anything about “mobile search”.   

  15. Marketing Day: October 23, 2012 says at

    [...] Yahoo’s Mayer Bets on Mobile, Bails on Local, http://www.screenwerk.com [...]

  16. Darby Sieben says at

    Andrew – per your comment about an anchor tenant. In Canada we launched last week with Yahoo our YellowAPI.com integrated into Yahoo Search with a customized version of YellowPages.ca built specifically for Yahoo located at Yahoo.YellowPages.ca.

    You can check out this integration by going to Yahoo.ca and doing a search for “dentists in toronto” as an example and you will notice that the local 5-pack is powered by YellowAPI. If users check out “sushi in vancouver” you will notice that we have embedded our reviews as well as part of the content flags on the Yahoo SERP. I have also put up some examples of before/after this integration at Darby.ca.

    As a note to the readers and full disclosure, I am the Head of Business Development for Yellow Pages Group in Canada.

  17. Andrew Shotland says at

    Thanks for pointing that one out Darby.  Hadn’t seen that before ;)

  18. Painters says at

    Yahoo needs to make an acquisition or two to bring in some quality young talent into their team once again.

    If I were Marisa, I’d buy Four Square and enter the Local market through them.

  19. Greg says at

    That was my earlier thesis as well. But it doesn’t appear that’s going to be happening now for a number of reasons.

  20. Greg says at

    Thanks Darby… Is the google deal still in place or is that long dice over?

  21. Carey says at

    Good discussion here – exactly what I expect from you guys. Mayer is smart enough to know that a true mobile strategy has to include some aspect of location/data/commerce. I would guess this is a bit more nuanced like “we may not invest more in small business data and maps on mobile, but seems very likely that Yahoo will help its big advertisers connect with consumers on mobile in the last mile to drive commerce.  So maybe the question really is “what really is local and where is the best return on investment?”  It probably isn’t in listings data.

  22. Greg says at

    The remarks didn’t read like: where can we make the most efficient investments in local? But I think you’re exactly right Carey. She will need to make some local deals or targeted investments if she wants to player in mobile search.

  23. Service Central says at

    Carey do you plan to offer your large sales force to Yahoo to help them drive deeper into the Local SMB Marketing space?

  24. Service Central says at

    As an aside does Apple need Yahoo for mobile search?

    Android = Google
    Windows Mobile =  Bing
    Apple = ??? Siri? Yelp? But no real proprietary search engine.

  25. Darby Sieben says at

    Greg – we still send basic data to Google. The integration looks like - https://plus.google.com/114837415835967224934/about?hl=en – under the map on the right hand side, it says Business Listings distributed by YellowPages.ca. 

  26. Greg Sterling says at

    Thanks Darby

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