Vamshidhar Kommineni

October 9, 2006

Terry Semel on Yahoo's role

Filed under: Technology — Vamshi @ 12:15 am

Saw an interesting interview with Terry Semel on Charlie Rose. Aired on 9/21 (I don’t watch much TV, so even though I save only the most interesting Charlie Rose interviews, my watching tends to be way behind schedule).

One of the things that struck me about this interview was how much he talked about monetization of search vs quality of the algorithms behind search. He believes that Yahoo is on par with Google in terms of quality of search but Google does a much better of monetizing each search query. I believe this is mostly true. For probably 90% of all searches, I suspect live.com (Microsoft’s re-branded search portal; it’s kind of sad that I even have to explain that) or yahoo.com will give similar searches to google. I do believe that Google’s algorithms still do a better job on the long tail search queries. This is purely from anecdotal observation of course (I switched over to using search.msn.com and then live.com about a year ago, and only revert to Google to compare search results, or when I think results from live.com are particularly poor).

Where Google does take it to the competition is in how good their Ad Words program is. I’ve read nothing but good things about how flexible and usable it is for advertisers. From a consumer’s perspective, I’ve been impressed by how easy they’ve made it for third party sites to earn revenue based on including ads from their platforms. I would argue that the real platform they’ve managed to build and innovate on is the ad platform and not the search platform (of course I wouldn’t deny that they innovated on search as well, but the competitors are catching up in this space). Hopefully, MSN’s Ad Center and Yahoo’s equivalent platform will even the playing field a bit more.

Terry also talked about how Search represents only 5% of the time people spend online (he says people spend 40% on information and entertainment, 40% on communication like IM and email and the rest 15% on commerce), and it’s in the other fields that Yahoo has an opportunity to do better than it’s major competitors. He also talks about the importance of global reach and being a media company as well a technology company, the latter of which is expected given his background.

I think Yahoo is a fascinating second runner (maybe not in reality but certainly in perception) to Google’s limelight. They are no longer as relevant in many ways as they used to be 5 or 10 years ago. I remember the days when Yahoo was pretty much the default portal for everyone for almost everything, and that clearly is not the case anymore, particularly among the younger demographic. I personally haven’t been to Yahoo’s front page in years and only use them for their movie places/times portal (not because it’s superior, but due to force of habit). At the same time, they have a very credible set of services in email, IM (both of which have way bigger customer bases than Google’s offerings) and other things. They are also probably the best one stop portal for the casual consumer bar none (sorry, MSN). And they are a company that gets media and technology at the same time. It will be interesting to see how they fare over the next 5-10 years.

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