Yahoo! Inc co-founder Jerry Yang yesterday said the company needs to improve its search capabilities in an increasingly competitive US market but that partnering with rival Microsoft Corp is not likely.
Yang’s comments came during a Q&A session with analysts at the Thomas Weisel Partners Internet & Telecom Conference in San Francisco, a day after Microsoft launched a beta web search engine as part of its revamped web services push.
I think we’re making really good progress, Yang said. That’s not to say the competition isn’t doing great. Yahoo’s big competitors, Microsoft, AOL, Google, and in some e-commerce markets eBay, continue to gain momentum also, he acknowledged. The competitive dynamics I think have only gotten more intense as economic models continue to prove this is a very big and lucrative market, he said.
Looking ahead, Yahoo plans to blend its two main ad businesses, which are brand or display advertising and search or performance advertising. The company believes it has a leadership position in brand and display, which it plans to build on, Yang said.
However, the company needed to improve its search business capabilities, he said. We are not happy with where we are today. We need to be a lot better.
Yang’s comments seemed a departure of sorts from those made several weeks ago by Yahoo CFO Susan Decker. She told Bloomberg News that Yahoo’s goal was not to beat market leader Google Inc in search, but rather to maintain its market share.
This year, Yahoo would be pushing hard on improving its search advertising and potentially network advertising on the performance basis, Yang said. Yahoo is also looking for opportunities to drive the intersection between search and brand.
Asked whether Yahoo would potentially partner with Microsoft on Search, in order to better compete against Google, Yang replied that there market was still early and robust enough to support three major players.
I do think Microsoft sees their chances of creating a third advertising network as a real one, they are well underway with doing things, he said. Microsoft clearly sees themselves as being one of the three networks out there to attract advertisers . . . we feel good about our roadmap and continue to differentiate.
One way Yahoo hopes to stand tall in the crowded search field is by developing better search with people, Yang said. That includes creating personalized search responses based on trusted third parties’ own search preferences. So, a user looking to buy a product could choose to see another user’s judgment about that product, in order to give greater relevancy in a search query.
In other words, it adds social influence to search results. This has huge potential because it does combine the user-participation model with the algorithm, Yang said. It will take multiple years to play out.
A more immediate focus for Yahoo, which Yang said doesn’t get much media attention, is small business.
We think small business in the US and other markets are very fragmented and a tremendous opportunity for a quasi-automated business model like we have to take advantage of, Yang said.
Yahoo isn’t looking to develop new SME capabilities that require heavy editing by the company, but rather more automated services. That may include having RSS infrastructure for SMEs to syndicate content relevant to their industry where Yahoo is a facilitator and not an editor, he said.
Asked whether Yahoo, which now has more than 450 million users worldwide, sees itself, as many analysts do, as more of a media company, whereas Google and Microsoft are more focused on technology, Yang replied both.
We love the media model and the scale that the technology gives us, he said. We clearly have a lot more media business, especially around our brand advertising business and our approach to marketers, that I think gives us a lot of differentiation.
The company continues to heavily invest in its infrastructure technology base and audience initiatives, Yang said. That includes its three-screen strategy of developing search for PC, TV and mobile. That is a very exciting long-term for us that I don’t think honestly we’re counting on for revenues in the short term, Yang said.
Of course, the number one priority for Sunnyvale, California-based Yahoo remains advertising, Yang said.