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Ad Age Interview

Yahoo Set to Open Checkbook for Audience, Technologies

CEO Carol Bartz: Overly Conservative Ad Business Makes Me Feel Like the 'Crazy Lady'

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SAN FRANCISCO (AdAge.com) -- Yahoo's CEO, Carol Bartz, had words of thanks for the advertising industry as she spoke earlier this week at the 4A's Transformation Conference -- thanks for its support the Yahoo-Microsoft search deal that recently won regulatory approval in the U.S. and Europe.

Carol Bartz addresses the 4A's conference earlier in the week.
Carol Bartz addresses the 4A's conference earlier in the week. Credit: Kipp Cheng
"I want to thank you guys for supporting that [deal]," she said, describing how its effects would "lead to higher quality clicks and better ROI ... and we think we need a more competitive search market," words that should warm any marketer's heart.

But those weren't the only words she had for the industry.

I sat down with Ms. Bartz after her speech, where she expressed frustration with the conservative nature of advertisers -- supposedly bearers of a creative industry. She also addressed the prospects of making money off of content on the internet, what she'll open up the Yahoo checkbook to buy, and where growth will come for Yahoo, which celebrates its fifteenth birthday this week.

Ad Age: When you came on board you were known as an operator. You have really streamlined the company and managed for the margins. But where will the growth come from?

Ms. Bartz: Growth will come from multiple areas. One is the economy coming back. We've all been victims of the world economy for the past two years. So that's No. 1. Two is we really believe we've made advancements in the world of display advertising -- how to measure, how to get better ROI. So we think we can help online branders come online. The third issue is there's immense growth internationally to bring new-to-net users online and then downstream to monetize them.

Ad Age: Sounds like you believe Yahoo is a content company. How are you approaching that and what's the interplay between content and utility?

Ms. Bartz: Content's important because that's how people are informed about what's going on, with our friends and with the world, whether that's local, regional or national. For us it's a blend of content we get through partnership, rich partnerships, and our own editorial voice on our site. We think that's important, both through deciding which content should be shown but also making sure it's a trusted neighborhood. I talk about the neighborhood all the time, which is we want the advertisers to know what the Yahoo neighborhood is.

Ad Age: Does Yahoo's model, which is to sell mass advertising against mass users, still make sense?

Ms. Bartz: People still have to display their brand in a more descriptive way than just keywords. Brands are an emotional experience. ... Same thing online. If we already have 30% of the viewers online for as much time as they are, brands have to follow as long as we can find the right audience for them. It's not just blast it all over, it's if you really want a mom that's 30 years old with children under 3 years old, we can do that.

Ad Age: There's lots of discussion about advertising alone not being able to support quality content online. You're an almost solely advertising-based company. What's different about what you're doing?

Ms. Bartz: It's a bit too simplistic to say we're only a content company. The amount of science and technology that we have behind our sites and our ability tot target and the insights we give with precision to the client, it's much, much more than content. The content is to draw the user in, the technology is for the advertiser to find an audience at scale. It has both sides and always will have.

If you have interesting content that draws users and you can find those relevant users -- and we have 600 million and there's no company on the planet that has 600 million users looking at the content that we have. And if you can deliver very targeted experiences, everyone wins because the person says, "Oh, I'm interested in that ad," and the advertiser gets someone who's interested. It's almost one-to-one. It's not there yet, because the technology's not there yet ... but we've got to make it a personal experience.

Ad Age: How is what you're doing different from AOL, which is beating the content drum day in and day out?

Ms. Bartz: Generally it's not different, we're just a lot bigger. The fact of the matter is, what they're trying to do at AOL -- and I shouldn't speak for AOL, they're very capable of speaking for themselves -- but I think it's like a mini Yahoo.

Ad Age: Will you be acquisitive this year?

Ms. Bartz: Absolutely. We've been very forward about this. Last year was looking internally -- I hired a new team, restructured the company. This year it's about what technologies: Do we need to fill in the blanks, what analytics, what tools?

Ad Age: What do you need?

Ms. Bartz: Well just imagine whether it's acquiring an audience -- a group of female bloggers, or whether it's acquiring some better analytics tools that help us guide campaigns with our partners, or whether it's technology. Last year we bought at company called Zoobut, which is better photo technology, so it let us do very modern photos in our mail. It's that sort of thing -- audience, technology and tools.

Ad Age: Yahoo has long talked about socializing itself. Jerry Yang spoke at CES a couple years ago talking about how Yahoo was going to be its own social network -- you had the infrastructure there with e-mail. How has that panned out?

Ms. Bartz: You know, social is a word that has almost become too narrow. And I think with Facebook's immense success, all of the sudden that's the only definition of social. But if you think back to the finance chat rooms, [those] were the beginning of social and people could actually interact. ... As we look at social we want people to be on the Yahoo site and have tweets come in and have their Facebook postings come in, so that it's a very personal place to be that helps them understand what's going on in their social world.

Eighty-one percent of Facebook users also come to Yahoo -- so everybody thinks they just go one place now, but people go all over and their social experience wanders around the web as well.

Ad Age: According to ComScore data, Yahoo's unique visitors have increased over the past year, while time spent on the site has declined. Does that matter?

Ms. Bartz: It does matter, time spent has declined a bit. Part of it is we need is more video. One reason people spend a lot of time is they're just sitting there watching it. So I do take it seriously, but our numbers are so huge it takes a lot to move those numbers. ... I think you'll see those numbers turn around.

Ad Age: What have been the results of the "It's You!" Campaign so far?

Ms. Bartz: "It's You!" has had a couple of good points and a couple weak points. I like the campaign because I like the message behind it -- it really should be the internet of one, what exactly do I like. You talked about engagement a minute ago, and the engagement of the My Yahoo people -- where they customize their site -- is through the roof and it's because it's exactly what they want. But most people want exactly what they want without working for it. So the idea of making it mine is the right message.

Some people came out and said, "What's my call to action? What am I supposed to do?" Where it really worked well is places like India, the U.K., where Yahoo's still a young brand to them. In the U.S., where we already have 80% of the internet users, it was more like "What do you want me to do? I'm coming there already." The next part of the campaign is focused more around products.

Ad Age: You got the approval for the Microsoft search deal recently. Now you're talking about building a new search experience with them or on top of their platform.

Ms. Bartz: Microsoft will run the basic platform -- the web crawling, the paid-search aspect of monetization. And the experience is in our hands, just like they have an experience with Bing, we have an experience in Yahoo search. So we can take our resources and best thinking and put it our that experience. Think of it as they're doing the Intel chip inside, we're actually making the experience of the device, what we own. ... You'll buy a Dell model or an HP model and you're thinking of how they actually created the machine and experience around it, you're not actually worrying about what's going on down here.

Ad Age: A recent analyst report said about a third of Yahoo's $21 billion valuation is derived from U.S. assets, the rest from international. Is that a good ratio for you?

Ms. Bartz: It's not exactly a third, but the point of the matter is still correct. We have a very lucrative asset in Alibaba in China, which I think is proving to be a very smart concept because it's getting harder and harder for companies to do business inside China, as Google's certainly finding out. Our partnership allows us to reap the reward of the Chinese internet without operating inside the country.

We also have a joint venture with Softbank in Japan, very lucrative for the company. You can look at it as good or bad -- you can look at it as "Oh my God, what great investments or partnerships" or "Oh my God, they're so big." But I happen to think they're both good.

Ad Age: You came into the advertising space as an outsider. What has surprised you about the industry?

Ms. Bartz: For an industry that's based on creativity and inspiring people, I don't know why it's so afraid. I don't think it should be afraid to just try some crazy new stuff. But when I talk to people about online marketing, they just seem to freeze. ... I thought this was going to be a much racier industry that wore black and got out there and rock and rolled and I see it being a little shier. I mean, I'm the crazy lady.

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