Careful, Yahoo -- It Looks as If Your Vision Is Finally Showing

Portal Is Making a Run at Leadership of a $40 Billion Online Display Market

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Wall Street seems to want Yahoo sold. Bankers, desperate for some M&A activity, have been circling for more than a year now. Wall Street has a friend in Carl Icahn, the activist shareholder who is looking to oust the board at the next shareholder meeting. And, of course, there has been no shortage of journalists happy to take a bit of news in return for penning a piece that effectively puts Yahoo back in the crosshairs.

And it hasn't been hard to frame an argument for new ownership or management. Google has won the keyword-search war, and while Yahoo can close the monetization gap in terms of what it earns per search, it's unlikely to grow share at this point. While Yahoo has built the foundations of an open social graph that could transcend the social network as we know it (Facebook, for example), for a long while it seemed to offer little answer to the phenomenon.

Like many others, the web giant has had trouble holding on to talent. And fending off agitators and would-be acquirers is a distraction for employees and a time suck for management.

Yahoo's dalliance during Terry Semel's reign with becoming a media and entertainment company set up the expectation that it was the web player that best understood how to sell to creatives and talk brand building as opposed to just click-through rates. But since Semel exited, that perceived edge has been blunted by technology speak that has many ad execs I talk to feeling confused about the Yahoo offering.

Indeed, that confusion is the rub for many Yahoo watchers who think the company lacks a clear vision and, even worse, can't articulate one. The stock answer of late, from both CEO Jerry Yang and President Sue Decker, has been that it's about the homepage, search, mail and mobile -- the web starting points. But that can sound more like a list than a vision for growth for a $7 billion operation.

Yet last week as I interviewed Ms. Decker at Advertising 2.0, I thought it was obvious she has a plan. It doesn't necessarily come across in all her or Yang's statements, and perhaps that's because they feel they have to please so many audiences -- developers, early adopters, tech reporters and so on -- with developments in their social and mobile offerings. But read between the lines of the deals Decker revealed at Advertising 2.0, and a focus emerges -- on display.

Where search was about one type of targeting (keyword), one format (text) and one pricing model (auction), display has many means of targeting (demographic, behavioral, contextual), types of ads and pricing methods (CPM, CPC, etc.). But the theory is that display could be bought and sold via a platform as user-friendly as Google's AdWords.

Ms. Decker's interest in search is about the ways a search platform can inform the planning, buying, selling and serving of display ads. She wants a display platform that can give advertisers all the relevant pages they need more or less at the click of a button. In other words, Yahoo wants to build the equivalent of AdWords for the display market. The stakes if Yahoo's Right Media becomes that engine: leadership of a $40 billion online display market that has barely begun to shake out or realize its potential yet.

Of course, alongside building the display engine itself, you need inventory and audiences to target those ads to. Yahoo, while the largest player in the market, still sells less than 10% of all banners. But strategic partnerships such as its deal with and the now-700-strong Newspaper Consortium are smart ways of extending that reach into enormous and valuable audiences.

Are those deals, and the promise that comes with automating the display market, enough? Not necessarily. But to me, it seems Yahoo is finally focused and pointing in the right direction. Is this the time to oust the board or sell the company? Sorry, Carl, but I just don't see it.
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