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Yahoo! Inc Case Study

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INTRODUCTION Yahoo has grown up as a portal company. They learned early on that by being sticky, by having a web presence that forced users to stay on their site, they could find ways to profit from their page views. This has led Yahoo astray though. Not only has Yahoo given up overall profits in search of ever expending user acquisition, they have allowed their search product to fall behind. Google, Yahoo’s chief competitor, has mastered the art of monetization, namely through contextual advertising.

Contextual advertising is when small piece of programming code is inserted into web pages which actually interprets the text and serves advertising based on keywords. Google’s offering, Adsense and Adwords, produces 99% of the company’s profits. This advertising network is built into both their search and branded sites. Web publishers are also growing to adopt Google’s version of website advertising to gain monetization for their own traffic. Yahoo has adopted this model of contextual advertising that has been so profitable for Google, but have yet to refine it enough to make a serious impact on the market.

The program is still in beta (the internet’s way of saying under construction) and has not made any headway at attracting new publishers or advertisers. The primary disconnect in the Yahoo model has been the lack of precision, because their search algorithm needs to be updated. The advertising network fails to interpret that an article is written about cars, and serves ads about entrepreneurs. Money is only made if a user clicks on the advertisements. This is an interesting dilemma. On the positive side, Yahoo has a brilliant banner serving system.

Since Yahoo still sees itself as portal, it still leverages Yahoo Money, Cars, Email, etc. Each of those sites has products or services that provide value to the user. A user shopping for cars is later targeted with the banner ads reflecting the cars that they were viewing online. Yahoo needs to focus on core content by improving exactly what it is that makes them money. They should focus on improving their ad network’s efficiency and allowing all publishers admittance. They should leverage their banner serving software with the contextual market and provide growth that way.

Google, the market leader, is simple and built around search. Yahoo needs adopt a like philosophy to remain competitive in their market. HISTORY Yahoo! Incorporated is an Internet service provider that serves both users and business globally. The company was founded in 1994 by David Filo and Jerry Yang who were attending Stanford University’s PhD program (The History of Yahoo! ). Yahoo! Inc. began as hobby for Filo and Yang and has now evolved into a multifaceted brand that serves internet users worldwide (The History of Yahoo! ). According to the Yahoo! Inc. ebsite, they have become one of the leading search engines on the World Wide Web (The History of Yahoo! ). Yahoo! Currently has 500 million users worldwide that visit the site each month. Yahoo! is provided to users in more than twenty different languages. The company also has office locations in Europe, the Asia Pacific, Latin America, Canada and the United States. Yahoo! Inc. is currently headquartered in Sunnyvale, California. Yahoo! Inc. was incorporated in California in March of 1995. Yahoo! Inc. first went public on NASDAQ in April of 1996. At this time Yahoo! Inc. tock opened for $13. 00 per share. At the close of its first day of the IPO, Yahoo! ’s stock had reached a closing price of $33. 00 per share. At this time the company only had 49 employees. The company was then reincorporated in Delaware in May of 1999. In December of 1999, Yahoo! Stock was added S&P 500. In 1996, Yahoo! Inc. began entering into joint ventures with SOFTBANK. Through this initial joint venture, Yahoo! Inc. was able to create Yahoo! Japan. Subsequently Yahoo! Inc. has teamed with SOFTBANK to create markets in Germany, United Kingdom, France and Korea. Yahoo! Inc. nd SOFTBANK have also created GeoCities Japan Corporation to create and manage a Japanese version of the GeoCities website. Yahoo! Inc. has also teamed in a joint venture with VISA to establish Yahoo! Marketplace. This joint venture occurred in August 1996 and has since then created a navigational service focused on information and resources for the purchase of consumer products and services over the internet. This joint venture alone created a new market for Yahoo! Inc. In January 2006, Yahoo! Inc. and Seven Network Limited, also known as SEVEN, have teamed in a joint venture as well.

SEVEN, an Australian media firm, signed an agreement with Yahoo! Inc. In this agreement, Yahoo! Inc. contributed its Australian internet business, Yahoo! Australia and New Zealand, and SEVEN contributed its online assets, television and magazine content. Yahoo! Inc. has a fifty percent equity ownership in the joint venture, operated under the name Yahoo7. Yahoo! Inc. also operates Flickr, a photo sharing and storing website. The company also provides its users with web mail, instant messaging, music, video, personals and much more.

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