Can Search Save Yahoo?

    May 26, 2012

To say that Yahoo has had its share of problems in the past few years is an understatement. The most recent news of the now former CEO Scott Thompson and his resume scandal has only added to the disorder surrounding Yahoo. The once highly regarded Internet giant has experienced all types of turmoil including numerous management changes, extensive layoffs, and the closing of multiple properties, all of which have raised a lot of questions about the company’s future.

Do you think Yahoo can make a comeback in search? Let us know in the comments.

The company’s “Search Alliance” with Microsoft leaves plenty of questions about the company’s future in search, as well, but there are rumors going around that the deal may not play out as planned. We spoke with Kevin Ryan, the CEO of Motivity Marketing, who says that based on rumors floating around in the industry, the search alliance between Yahoo and Microsoft might not make its projected 10-year tenure.

“There’s a lot of rumors in the business that [it] isn’t going well, and that it’s not going to make the full-decade run,” he tells us. “So, if I’m Yahoo, I’m spending a little bit of money trying to figure out how we can get that search bucket going.”

When the agreement was reached, Search Engine Land’s Danny Sullivan spoke with us about the impact of the deal on each company. “[A] big win for Microsoft, a lot of questions for Yahoo,” he summarized.

“Yahoo effectively threw in the towel with search,” says Ryan of the alliance.

Despite the many reports on the struggling search alliance, David Pann, the General Manager of Search Networks at Microsoft, spoke with us last year and pointed out that the companies had already experienced success, even in its early stages.

“It’s easy to say, ‘Okay, well, you didn’t do this, you didn’t that – it’s a failure,’” Pann explained. “I don’t think of that. I think that, given where we are, and given the complexity of the relationship… we’re actually making very good progress.”

However, if the rumors are true and Yahoo does pull out of its agreement with Microsoft, the company will have to begin thinking about search again. The only other option would be to sell its search business completely.

Kevin Ryan, CEO of Motivity Marketing According to Ryan, there are several instances that could be credited as catalysts for Yahoo’s downward sprial, but he believes its Panama search ad platform played a large role in beginning the downfall. Panama was Yahoo’s attempt to monetize search, as Google did, but instead, Ryan says it was an “abject failure” for Yahoo.

Ryan compares Yahoo’s current situation to what happened with Ask. The former search engine pulled out of the search industry in 2010 and has now transformed itself into a questions and answers service with an emphasis on mobile.

There are some who would likely consider Yahoo to be a former search engine as well. Yahoo is currently in the process of reinventing itself as a media company, but the company’s short-term leaders have had difficulty in making this transition. Ryan, however, doesn’t believe this particular attempt is the best option for Yahoo.

“Stop trying to reverse engineer HuffPo,” said Ryan, “and create something new.”

But, Yahoo’s performance as a media company has been nothing to shake a stick at, and for many, Yahoo’s homepage works very well as a portal to the Web. Just take a look at Yahoo’s realtime homepage view counter at any given day. So far today (at 8:30AM Pacific), the page has already seen over 73 million views .

Yahoo Homepage views

Still, Ryan tells us that Yahoo should reinvest in its core business, in which search plays a very big role. With a renewed focus in this area, he believes Yahoo could better serve consumers and also advertisers, which could help it get back on the right track.

Ryan told us there could be opportunities for Yahoo in terms of social development. Both Google and Bing have yet to completely succeed in social, which leaves an open door for Yahoo. He believes that a renewed focus on search combined with the opportunities in social could help to begin to turn Yahoo around. In addition, Ryan would like to see Yahoo make drastic changes internally in order to streamline its processes and improve its culture.

“I hope that the change that Yahoo makes will be very internal,” he said. “I hope that the culture internally will become much more positive, but we’ll see.”

At this point, Ross Levinsohn is Yahoo’s interim CEO. Although some people believe he will become the permanent CEO, Yahoo has not indicated any official word for who its next leader will be.

It’s inevitable that changes will happen at Yahoo in the coming months, but what they will be and whether or not they will be effective in saving the company are both still in question. On the positive side, Yahoo was able to finally reach an agreement with Alibaba Group. The $7 billion deal will require Yahoo to sell back half its stake in the Chinese company, but it brings resolution to one of its many problems.

Do you think search should play a significant role in Yahoo’s future as a company? Share your thoughts in the comments.