Four Ways Yahoo Can Right Itself Under New CEO Bartz

For Starters, Don't Do a Search Deal, No Matter What Shareholders Say

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NEW YORK ( -- Carol Bartz said she doesn't want any advice from armchair critics and industry pundits. In fact, as she said in her introduction as Yahoo's new CEO, she'd like to have a little "friggin' breathing room." But we're going to give her some counsel anyway.

Yahoo's new CEO, Carol Bartz
Yahoo's new CEO, Carol Bartz
After all, the salty-mouthed exec is an advertising and media newbie. And while she insists it doesn't matter -- "I suspect I have a little brainpower to learn what it takes to understand media," she said on her first call in her new post -- there are far too many smart marketers who want to see Yahoo succeed for us to keep quiet. So here are four things Yahoo can do to right itself.

Don't sell search
This is controversial advice, since many shareholders are clamoring for some sort of deal to be done. When Ms. Bartz indicated in an internal Yahoo meeting that her gut told her not to do a search deal, the stock fell almost 7%.

But if Yahoo sells search it loses the thing that most sets it apart from other display-ad-centric portals: It has both. Plus, it's entering a year in which direct-response channels such as search are poised to best more-traditional media channels. While marketers want to see a clear competitor to Google -- which likely means a Microsoft-Yahoo search consolidation -- Yahoo has a lot to lose by shedding what could be its long-term differentiator and short-term survival tactic.

Consider ways to win in search category by category. Yahoo has great sports and finance sites, for example. It should start marketing its search users coming through the vertical sites as highly valuable, pre-qualified searchers.

Combine search and display data
Gaining search market share among consumers is going to be an uphill battle with Google, but Yahoo could start gaining share of spending by integrating its valuable behavioral and registration data with search queries.

"Would I pay more for someone who's visited a review site in my category in last 30 days?" asked Matt Naeger, exec VP-operations at search-marketing firm Impaqt. "I'd be willing to pay more for that, and Yahoo would have more of that info than any of its competitors."

Bryan Wiener, CEO of 360i, agreed. Yahoo has great search and display assets, he said, but "they've been unsuccessful in positioning them as a single entity. That needs to start from the top."

Go after the Unilevers of the world, not the Netflixes
Netflix may buy more online ads, but Unilever's $2.25 billion marketing budget represents far more opportunity. "My view, as it's always been, is that Yahoo has pretty much the biggest potential reach as a brand builder of all of the digital-media platforms," said Rob Norman, CEO of Group M Interaction. "But they've been somewhat obsessed with Google and advertising as a math problem. They should concentrate on their brand-building assets."

How? The bet is not on developing a cheaper, more efficient way to buy display; that's a race with the ad networks to the bottom. Spend time concentrating on the quality stuff: video, highly engaging rich media, games and content integrations. Experiment with engaging ad formats whose impact on brand building can be measured and held accountable. (Hey, maybe search can be used to measure this.) Continue to invest in package-goods-friendly return-on-investment-oriented services such as Yahoo Consumer Direct, a partnership with Nielsen HomeScan.

Forget AOL; buy Hulu
And then make CEO Jason Kilar your No. 2. That's GigaOm founder and senior writer Om Malik's advice, and it's worth considering. Yahoo has a long tradition of a strong No. 2, and Mr. Kilar is a rare one with experience in both media and technology.

Jason Kilar
Jason Kilar
Hulu has won over billion-dollar advertisers by selling them something that's comfortable -- video ads in high-quality TV content -- but also steadily gained reach by putting users first.

Since Hulu is selling to TV buyers who aren't otherwise buying online, it would help Yahoo tap the $70 billion TV market, and might help make its Connected TV initiative something more than vaporware.

And, as Mr. Malik points out, the user-experience-obsessed Mr. Kilar could do wonders for Yahoo's services. Yes, it would be expensive. A deal would cost Yahoo multiple billions. Consider it an investment in the future.

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Contributing: Michael Learmonth

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