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What is to become of Yahoo?

Last week, new CEO Scott Thompson laid off 2000 Yahoo! employees, about 14 percent of its workforce. This came after a long period of tumult for the company. Here, a worker moves a section of a Yahoo! billboard onto a truck on Dec. 21, 2011 in San Francisco, Calif.

For a lot of us who first got online in the 1990s, Yahoo! was a pretty special place. It took the whole wide worldwide web and organized it, at least kind of. Yahoo! was our search engine, it had news stories, it eventually offered email, it had all kinds of things going for it. But that was a while ago and Yahoo! hasn’t really managed to roll with the punches all that well. It kind of got punched by the punches instead.

Last week, new CEO Scott Thompson laid off 2000 Yahoo! employees, about 14 percent of its workforce. This came after a long period of tumult for the company, including CEO Carol Bartz being fired last September. Tomorrow, Thompson is expected to announce a new direction forward for the company, an attempt to transform the brand. It won’t be the first time someone has attempted that.

Yahoo! has gone from “a directory to a search company to a media company and a collection of separate entities and who knows what,” says Rafe Needleman, editor-at-large for CNET. “Nobody knows what Yahoo! is.”

For Yahoo! to get things turned around, Needleman says, it has to get creative. “It has to keep innovating. It has to be successful in social and in mobile which are huge growth areas and it's unclear how exactly how Yahoo stays on the top of the heap that way,” he says.

Making a splash in social networking is easier said than done, however. David Hallerman, an analyst at e-Marketer, says Yahoo shouldn't try to be something it's not. “As much attention as social gets, it's not the whole Internet and there are some properties that Yahoo! has that still are both very strong and attracts a large audience,” he says.

With assets like financial news, sports, and email, Yahoo! is still the number four most visited website in the world. (Am I sick of putting the exclamation point at the end of Yahoo!’s name? You! Bet! I! am!)

“What that audience does is create data,” says Hallerman, “and data is the ultimate currency of online advertising and marketing.”

Here's the idea: Yahoo! learns about you when you visit the site and shares that data with advertisers. Advertisers pay Yahoo! to deliver you ads based on your interests. Yahoo uses that money to build more cool online things that make you come back. In short, you put up with ads to get cool stuff.

Says Hallerman, “For people to understand just as here we're talking non-commercial radio, but the rest of radio, TV, people understand I’m getting this, I’ll endure the ads. The idea of that has not always been as clear online, but that's something that companies evolved in this space are starting to do more and need to do more.”

Even if that works, however, Yahoo! may have a long road ahead. “There's nothing, very few things out there anyway, that are being done that are not being done well by several different companies,” Needleman says. “So, if Yahoo! were to vanish from the Internet today, it would be difficult, but there's very little Yahoo! is doing that cannot be found elsewhere.”

Maybe they should sell the exclamation point.

Also in this program, a new report details how social network users shop differently. Spend a lot of time on Facebook? Then you’re more likely to fly Virgin Atlantic, own a Saab, and, for some reason, buy Suave shampoo. 

About the author

John Moe is the host of Marketplace Tech Report, where he provides an insightful overview of the latest tech news.

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