Yahoo released Q1 earnings yesterday (so did Apple of course). As as been pointed out, the company’s core business is basically flat. Partly this is a result of more intense display ad competition (Google, Facebook, etc.), more overall display impression “liquidity” (supply) and the pre-Mayerian outsourcing of PC search to Bing.
Pressured by institutional shareholders CEO Marissa Mayer is spinning off the company’s remaining Alibaba assets into a $40+ billion holding company, appropriately named “SpinCo.” That news overshadowed Yahoo’s mixed earnings and boosted the company’s stock after hours yesterday.
Mobile revenues were one of several positive notes in the company’s earnings. Yahoo said it had $1.2 billion in mobile ad revenues in 2014.
There’s growth potential for Yahoo in its “MaVeNS” cluster: mobile, video, native (ads) and social. Mayer said this group of ad products generated $1.1 billion in 2014 revenue. Gemini (as a part of that) appears to be doing relatively well.
Yet even as Yahoo promotes itself now as a mobile-first company it continues to have a big hole in its offering: local search. You can do local queries in Yahoo Search (PC and mobile). But what’s available today — especially in mobile — is basic and doesn’t compete effectively with Google or Yelp or verticals/vertical apps. It doesn’t motivate repeat usage.
Back when Mayer took the helm she said she wasn’t going to compete in local. What she meant was she wasn’t going to go up against Google Maps and all the technology and investment behind it. But there’s a way to do local that doesn’t require going toe-to-toe with Google Maps or Apple Maps.
For some time I had thought that Yahoo would try and buy Foursquare to try and plug the local search/local-mobile hole. That obviously hasn’t happened.
However I continue to believe that to grow mobile search revenues and to attract and deepen mobile usage it needs to have a more compelling local offering. Yahoo has basically outsourced reviews to Yelp, maps to Nokia and search to Bing. That makes it difficult to imagine what Yahoo might develop internally that could capture and retain usage.
Acquisitions remain an option. Alternatively, rather than building out a new local-mobile search capability beyond what already exists, Yahoo could supplement with specialized vertical apps: restaurants and entertainment or city guides or travel. This approach might be more “do-able” and yield a better return for the company.
Yahoo could partner for some of the content (with a mix of third parties) and use internal assets to develop something different or unique. Regardless, I continue to believe that it needs to do something with local search in mobile. Given the company’s limited resources and apparent lack of will it’s not clear what or whether that will be.
What’s your view?
Where might Yahoo be able to build or buy a strong local-mobile experience? Or is it just a rabbit hole not worth going down as Marrisa Mayer seems to be implying?