Despite frugal online advertising, Yahoo! has built a strong Internet brand, making it Ad Age's top marketer in the portal category.
Yahoo! doesn't break even the top 25 of online ad spenders, yet it's the No. 1 Web publisher in ad revenue, netting $88 million for the first nine months of 1998, according to InterMedia Advertising Solutions. By comparison, No. 2 Excite earned $74 million; Infoseek earned $51.8 million.
With 47 million registered users, Yahoo!'s also the top site accessed from work, according to Media Metrix. It ranks second only to America Online in traffic accessed from home.
Offline branding has helped Yahoo! achieve this status, as have merchandising efforts that go as far as a barter deal with the San Francisco 49ers, which has fans bellowing "Yahoo!" to cheer their team as the portal's purple logo screams across the football stadium screen.
Karen Edwards, VP-brand marketing at Yahoo!, cites continued emphasis on adding users and meaty content for the portal's success.
"We've really focused our marketing efforts on attracting new users and providing an experience online that makes them stay," Ms. Edwards says. "We have some of the highest loyalty metrics," she adds, noting that Yahoo! regularly ranks in the top five sites in average minutes a user spends online a month, according to Media Metrix. It also ranks high in studies tracking how many users bookmark Yahoo! or choose it for a default home page.
Quickly picking up on users' interests is key to so-called stickiness--length of time people spend on and how loyal they are to the site, Ms. Edwards says. For instance, when music groups Hanson and Backstreet Boys became frequent search queries, Yahoo! added chats with them during summer breaks.
"If we wait to hear about it in the news, it's too late," she says. "We need to be one step ahead in order to have a better service than our competition."
Offline marketing has also grown the brand. Analysts say Yahoo!'s early and inexpensive grass-roots promotions, such as local sports sponsorships, helped it leapfrog the competition. It also beat other major search engines in launching a national ad campaign.
`1ST MOVER' ADVANTAGE
"There's a huge first-mover advantage," says Evan Neufeld, director of online advertising at Jupiter Communications, adding that a chunk of Yahoo!'s success can be boiled down to as simple a thing as having a great name.
During recent years, it's ramped up its national ad budget, spending $8.6 million in offline advertising in '98, according to Competitive Media Reporting. Its agency, Black Rocket, San Francisco, has evolved commercials tagged "Do you Yahoo!?" to reflect the portal as a place where people can connect with others sharing common interests. TV spots, print and radio all maintain the portal's irreverent, hip tone.
In January, Yahoo! inked a multimillion-dollar media deal with News Corp., involving nine of its units. The co-promotion launched during the Super Bowl pregame coverage on Fox and has extended to air-time plugs for Yahoo! during "Family Guy," a new animated series on Fox.
While spending was undisclosed, the deal includes cross-promotions on Twentieth Century Fox Film Corp., Fox Music, Fox Interactive, Fox Broadcasting Co. and Fox cable channels. It was the first time Yahoo! participated in a media partnership of this scope and scale.
In exchange, Yahoo! has agreed to promote Fox properties and programming on its site through chats, banner ads and other plugs.
The Fox partnership was a critical move for Yahoo!, giving it a broadcast voice. Rival Infoseek Corp. gets promotion for its Go Network on ABC and ESPN, through its partnership with the Walt Disney Co., and Snap.com locks in space at NBC, which co-owns the portal with CNET.
Online advertising is also important, and Yahoo!'s lack of it isn't because it doesn't believe in the medium. It just thinks it has the medium covered through partnerships with several hundred media and content sites, showing off the Yahoo! brand through these distribution channels.
"We've done some very small purchases online in the past," says Ms. Edwards. It's focused on partner sites, such as recent acquisitions GeoCities and Broadcast.com, because they give Yahoo! access to potential new users.
`PART OF THE PROBLEM'
But overall, "When the majority of people online have already used your service, it's hard to get incremental value without advertising on your competitors' sites," she says. "That's part of the problem."
Yahoo! has also been an Internet leader in offline merchandising, rivaled only by America Online's plug in "You've Got Mail," the movie starring Tom Hanks and Meg Ryan released last year. The Yahoo! Zamboni, a fixture at San Jose Sharks' hockey games, snagged the spotlight in "EdTV" and "Arlington Road," a film being released in July, in which a character uses Yahoo!'s search services.
Yahoo! has also rolled out an impressive variety of products that transcend the usual T-shirt and baseball cap vehicles. Jennifer Price, senior marketing maven at Yahoo! in charge of licensing and brand promotions, says to qualify as a Yahoo! product, something has to be "fun and entertaining," as well as "useful and convenient."
Products range from Gregory Mountain backpacks sold at REI to baseballs, home accessories, sunglasses, computer glasses and school stationery, which is expected out this summer. It's also working on a Yahoo! compilation CD and is in talks with major apparel companies.
"We're really fortunate; the way the brand has been built it can transcend the online space," says Ms. Price.
Servicing advertisers is something else at which Yahoo! has excelled. In January, it rolled out Fusion Marketing Online, integrating all of Yahoo!'s ad sales and merchant programs, including the services of recently acquired Web direct marketer Yoyodyne.
So far, clothier Eddie Bauer Inc., travel site Lowestfare.com and Web clothing retailer Bluefly are a few that have taken advantage of its new direct marketing services.
Yoyodyne's "Get Rich Click" program, renamed "Treasure Hunt" since being bought by Yahoo!, invites users to register for a sweepstakes and then updates contestants with e-mail offers. Yahoo! has also launched "Birthday Club" that sends users coupon-laden e-mails on their birthdays.
FIGURING OUT WHAT'S IMPORTANT
"We have clients who've tested 10 to 15 offers inside `Treasure Hunt' in one week," says Seth Godin, VP-direct marketing at Yoyodyne. Mr. Godin says advertisers can apply results generated from within Yahoo! to the Web at large. "You can test it and figure out which offers scale. You've gotten someone to click on your banner, and know what is suddenly important."
Mr. Neufeld says one of Yahoo!'s smartest marketing moves was acquiring Yoyodyne. The portal war is shifting from which site has more content features to which has a more loyal, qualified audience, enabling it to charge more for targeted advertising, he adds.
"Right now all the portals are about getting people to their sites," Mr. Neufeld says. "They have to be about keeping people there" and stop focusing on "this reach hooey game," referring to the emphasis paid to mass reach and ratings services.
"Yahoo! needs to concentrate on quality CPMs, and the only way you get that is knowing more about your audience."
Copyright May 1999, Crain Communications Inc.