case - yahoo

7/29/2019 Case - Yahoo

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Yahoo!: Do you Yahoo? For How Long?

When Yahoo! first began advertising, there were about 75 to 1000 different start-

up internet companies at the time, and we had to say something big and we had to say

something relevant and we had to say something that mattered to consumers, comments

Bob at Black Rocket, Yahoo!s advertising agency. What did they come up with?

Humorous ads that showed consumers finding everything from big hair to fish bait with

the tagline Uh, do you Yahoo? The message was when you get on the internet, you

score. You can find anything. That gives you a great feeling.

The message obviously worked because today Yahoo! is one of the two or three

internet portals expected to survive the coming portal war along with mighty AOL.

Started for fun by two Stanford University PhD. students who published a directory of

their favorite Web sites, Yahoo! has leaped into the number two spot by capturing 50.8%

of all internet users.(May 1999). It has 47 million registered users who spend more than

an hour each month at the Yahoo! site and over 60 million viewers a month. Growth of

its stock prices are surreal; in 1997, price climbed 517%, in 1998 by 584% and its still

climbing in 1999. And Yahoo! has repaid its investors by becoming the first internet

portal to become profitable. Its profits went from one penny per share at the beginning of

1998 to over 13 cents a share by the end of the year.

Survival in the portal war, however, requires stickiness which means keeping

users at a portal longer. The more they use the site, they more stuck on it they are.

Building stickiness is not that easy. To start you need a good brand that matters to the

community you want to reach. This is where Yahoo scores! Their name is funky and

cool. It reinforces success on the internet. After you score, you want to Yahoo! Its offline

advertising successfully communicated Yahoo! as the find anything, go anywhere search

engine for the net. Unlike techy-sounding names, Yahoo! sounds like fun, is less

intimidating and lives up to its name. It works.


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In keeping users at a site longer, branding is very important. One of the main ways

of building a set of satisfied users is through My Yahoo! (all portals have some similar

program). Through My Yahoo!, the user can receive email and tailored information on a

variety of subjectsprice quotes on stocks he/she is interested in, weather in the citiesthey want to travel to, news that pertains to their interests, items they might want to bid

on at Yahoo! auctions and more. Because security is an issue on the net, users are not

going to trust a lot of personal information to someone they dont know and trust. So,

Yahoo!s early TV advertising campaigns and off-beat promotions spread the word about

the firm before other services began to consider advertising off line. Theres a great

advantage to being there first. Would-be users discovered Yahoo! on radio and TV. They

may have seen the Yahoo! zamboni at San Jose Shark games, seen a kid with a Yahoo

kazoo, or someone on a skateboard with a Yahoo tee-shirt.

Another means of generating repeat usage is providing customers with ways to

interact. In 1998, Yahoo! became the first portal to launch virtual clubs. This is a kind

of mega-chat room where people of like interests can schedule chats and conversations,

share content and post links to other sites. Speed to market is a major component of chat

rooms on occasion. When music groups Hanson and Backstreet Boys became frequent

search queries, Yahoo! added chats with them. If we wait to hear about it in the news,

its too late, says Karen Edwards, VP-Brand Marketing at Yahoo! We need to be one

step ahead in order to have a better service than our competition.

Yahoo! also targets kids. It offers a safe service especially designed for children,

Yahooligans! where kids can find information, work on school assignments and talk to

each other without parents fretting about their viewing inappropriate material. If you get

the kids, usually their parents will follow. Why would a family use two different portals?

Yahoo! is internationalits available in fourteen languages and offers the same

services adapted for the individuals home country. So, in Spain, Yahoo! is in Spanish

and in Japan, its in Japanese, but the same personalized services such as e -mail, pagers,

weather information, travel services, news, etc. are available to users.


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Yahoo! has cast its net very wide (global) to catch users and very deep by offering

something for everyone. And it keeps adding services. Recently, it inked a deal with

Petstore.com in which Petstore banners will appear on Yahoo! and be featured in Yahoo!

email messages to users. Because Petstore uses a humorous tone in its advertising, itsimage meshes well with that of Yahoo!. The Petstore ads will stress the ease of ordering

and convenience of UPS delivery for users. Petstore is able to access the huge database of

Yahoo! users with direct advertising messages and Yahoo! is able to offer another service

to its customers plus use the Petstore advertising to attract new users.

This ability to mass customize messages or micro market one-to-one to consumers

is a dream of marketers according to Elizabeth Macken of USWeb-CKS. In the offline

space, its just been too expensive in both time and money for most companies to afford

(one-to-one marketing). The Internet is taking many of the time and cost factors out of

the equation, making one-to-one marketing a reality for thousands more industries.

But it takes good handling to use direct marketing on the Internet without

alienating registered users undesirous of messages piling up in their cyber-mail boxes.

Junk mail is unwanted wherever you get it. So, Yahoo! is very careful to send messages

only to those users who have indicated an interest in hearing about new services rather

than spam all of its registered users at once.

To expand its user base, Yahoo! purchased GeoCities, one of the most popular

personal publishers on the internet. Adding GeoCities four million personal Websites to

their database will greatly enhance the number of repeat users. Who wouldnt return to

their own websiteespecially when its aligned with Yahoo! and provides access to

Yahoo!s services?

Yahoo! also signed a cross-promotional deal with News Corp. Through this

arrangement, Yahoo! gets exposure on all Fox media outlets. It kicked off during the

Super Bowl (1999) with several Yahoo! plugs and ad spots.


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Yahoo! is a sponsor of Fox TVs new Family Guy, a situation comedy which

debuted after the Super Bowl and included an online chat with the series creator and

producer immediately after. The deal with Fox will get Yahoo! coverage in Twentieth

Century Fox films (Edtv and Arlington Road), Fox Music, Fox Interactive, FoxBroadcasting and cable channels. In return, Yahoo! has agreed to promote Fox properties

and programming on its site through chats, banner ads and other plugs.

To transform itself into a major media powerhouse, Yahoo! acquired Dallas -based

Broadcast.com Inc. in a stock swap and in May 1999 launched a music service that

contains 10 channels. Demonstrating use of a corporate brand plus product name, the

channels are named Alternative Rock, the 80s, Y! R&B Jamz, Electronica, Classic Rock,

Y!Oldies, Y! Classical, Y! Jazz, Y! Country and Celtic. The Yahoo! Radio player, which

uses RealNetworks G2 technology, contains an artist info button that links to a Yahoo!

site offering the listener more information on the artist and music as each song plays.

While theres no official E-commerce partner for the project, there are links to CDnow

and Yahoo!s own music commerce site, Yahoo! Music, on the artist information site.

We think the Internet offers a lot of potential as a significant new broadcast medium,

says Yahoo! senior producer Erik Schwartz.

Its inevitable that audio and video will be the very heart of the Internet

experience, says Ron Rappaport, an analyst with Zona Research Inc. in Redwood City,

California. The only question is when it will happen. The deal with Broadcast.com

moves Yahoo! well along the road to being an internet audio and video giant. With its

connections to Fox, it could become a leading programmer on the Internet. If you want

people to be stuck on your site, entertainment ought to be a powerful magnet. Just think

of the time that one can spend listening to music or watching videos on the site!

Examples are: Yahoo! Finance, a major Internet site for business information, will

transmit executive speeches and analyst conference calls of interest to investors. Yahoo!

Sports will run replays along with text stories about games. Yahoo!


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Shopping will show video clips, such as the highly successful Victorias Secret

fashion show. And Yahoo! Health may have a wide variety of videos for medical news.

One could spend hours at the site at work and during leisure time.

Yahoo! has definitely not forgotten businesses. Already it offers a wide range ofother services, from database management, website hosting, help with direct marketing

and even financial services to the companies that sell through its site. In January 1999, it

rolled out Fusion Marketing Online, integrating all of the ad sales and merchant

programs, including the services of direct marketer, Yoyodyne that it recently acquired.

So far, Eddie Bauer, Inc., travel site Lowestfare.com, and Bluefly (Web clothing retailer)

have taken advantage of the new direct marketing services. Yoyodynes Treasure Hunt

invites users to register for a sweepstakes and then updates contestants with e-mail offers.

All of these not only increase the database, they also have higher margins for Yahoo!

That is especially important as Internet advertising revenues have declined in the

1998 and 1999. Businesses have become more skeptical about the impact of advertising

banners that users may bypass without noticing. Thus, direct marketing may offer more

potential for building sales and profits on the Internet.

The portal war is shifting from which site has more content features to which has a

more loyal, qualified audience, enabling it to charge more for targeted advertising.

According to Mr. Evan Neufeld, director of online advertising at Jupiter

Communications, Right now all the portals are about getting people to their sites. They

have to be about keeping people there stop focusing on this reach hooey game.

Yahoo! needs to concentrate on quality CPMs, and the only way you get that is knowing

more about your audience. It appears that the new business model for the Internet is

database, direct marketing. While this appears to be aimed primarily at businesses by

enabling them to sell to final consumers, it is also a service that brings desirable

opportunities to the consumers attention. It benefits both the buyer and seller and

Yahoo!.


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Questions for Discussion

d) How does Yahoo! segment the market for its Internet service? How does this helpYahoo build a customer franchise?

e) What needs does use of the Internet satisfy?

f) How does personality relate to Internet usage?

g) How does Yahoo! affect consumers perceptions of its service? What media does it

use? How does it create an image for Yahoo!

h) How does Yahoo! facilitate learning? What kind of learning is this?

i) How does Yahoo! affect attitude formation toward the Internet and toward itself?

How does it affect the three components of attitude?

j) What is Yahoo!s communications strategy? media strategy? message strategy?

k) Will the database, direct marketing model help Yahoo! to be one of the two or three

survivors of the portal war?

case - yahoo

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