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Can Marissa Mayer save Yahoo! (Part 4): Mobile, Advertisements and Monetization- Mayer still has a point to prove.

Posted in Mobile Devices and Company Updates by Manas Ganguly on August 4, 2013

One place where these hard-core researchers might focus their attention is search. Although Google dominates the space and Yahoo has had Microsoft (MSFT) power its search engine for the last three years, Mayer still believes Yahoo can find new ways to present search results. “Search is far from over,” she says. “It’s physics in the 1600s or biology in the 1800s. There’s miles to go before you get to quantum physics or even a microscope. There’s a lot of that you can do once you have mobile, and we are going to be very focused on the user experience.”

Unlike other mobile powers such as Apple (AAPL), Google, Facebook, Samsung, or Amazon, Yahoo neither controls an operating system nor makes popular hardware devices. And unlike Netflix—or HBO (TWX) or Showtime (CBS), for that matter—it doesn’t own blockbuster shows people are willing to pay to watch. Yahoo’s Weather app may delight design aficionados, but it doesn’t hold a user’s undivided attention the way an episode of Game of Thrones does on HBO Go. Mayer has locked up at least some exclusive content. In April, Yahoo purchased the online rights to old Saturday Night Live clips for an undisclosed amount. She says her strategy is to partner with other players, pushing Yahoo’s licensed content, original shows, and collection of apps to other companies’ hardware. For example, Yahoo makes the default stock-quote application on every iPhone, and Mayer has talked about doing more such deals. The risk is that any company might decide at a moment’s notice to replace Yahoo’s offerings with something else.

Even if its free mobile apps become huge hits, Yahoo has to figure out a way to monetize them. The company is no doubt quietly developing a strategy to advertise within its mobile services, though Mayer will only say she’s focused on developing products that users love. Even there, though, rivals are ahead. Facebook stock rose 30 percent the day after it revealed that 41 percent of its revenue now comes from ads on phones. Although Yahoo doesn’t disclose mobile revenue, Macquarie Securities analyst Benjamin Schachter estimates its mobile ad percentage is well under 10 percent.

For all her credibility with engineers, Mayer is an unknown to Yahoo’s biggest advertisers. “To be out there meeting with clients and advertisers is not her thing,” says Marla Kaplowitz, the chief of media agency MEC North America. As for its products, “Yahoo still needs to be a lot more nimble,” says Kaplowitz, noting that running large ad campaigns across Yahoo’s stable of services is particularly cumbersome.

Yahoo’s revenue topped $7.2 billion in 2008 and has since fallen by almost half. For the last 12 months, sales were $4.8 billion. “I’m not confused; I know we have a lot of work to do,” Mayer says, standing up in the URLs cafe as the FYI session is about to begin. “Up until now, things have gone really well. If you tell me that I’ve got to go back to last July and do it all over again, I’m not sure I could. I was optimistic, but a lot of the progress we have made has surpassed even my expectations.”

By way of explanation she mentions an improbable role model: Sarah Hughes, the American figure skater who competed at the 2002 Winter Olympics in Salt Lake City. “No one thought Sarah Hughes had a chance to win,” she says. Then all the favorites flubbed their routines, and Hughes landed seven spectacular triple jumps and ended up with the gold. “Afterward, Hughes said that she didn’t quite know how she had done it,” Mayer says, “and she wasn’t sure she would ever be able to repeat it. It was the routine of her life.”

It’s an inspirational story that could be interpreted in two ways: Plucky underdog triumphs because of talent or because superior rivals choke. “I feel like Sarah Hughes,” Mayer says. “Actually, I still have her performance saved on my TiVo.”

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Can Marissa Mayer Save Yahoo! (Part III): The Product Focussed Turn-Around

Posted in Mobile Devices and Company Updates by Manas Ganguly on August 4, 2013

Continued from Part II

Cahan’s division, called Mobile and Emerging Products, now exceeds 330 people and has its primary offices in New York, San Francisco, and Sunnyvale, Calif. Underscoring mobile’s importance, Mayer ordered the team’s work space in Sunnyvale renovated. Unlike the soporific purple and beige cubiclevilles that fill the rest of Yahoo’s dot-com-era headquarters, the mobile group has adjustable workstations that let employees sit or stand. There’s an exposed ceiling, whiteboards on every other wall, and big colorful posters that display giant iPhone screens.

The division’s employees also get personal attention from the boss. Mobile engineers describe regular product reviews where Mayer pushes them to move faster and think bigger. She often focuses on individual pixels on the screen and is comfortable letting her instincts trump empirical data. “Just because we have a ruler doesn’t mean we have to measure everything,” she said at one review, according to Lee Parry, senior director in the mobile group and a seven-year Yahoo veteran.

Over the last few months, Cahan, Parry, and their colleagues have released apps for Yahoo Mail, Weather, Fantasy Football, and the Flickr photo-sharing service. They’ve also unveiled the Yahoo news-reading app, which integrates technology from Summly, a startup founded by London teenager Nick D’Aloisio that Yahoo bought in March for $30 million. The app uses Summly’s text-summarizing software to abridge everything from sports game recaps to Mayer’s own quarterly earnings presentations.

Yahoo says that after redesigns, traffic to mobile applications such as Yahoo Mail, Yahoo Weather, and the news app is up 120, 150, and 55 percent, respectively. There are clearly more apps on the way: A large chart on the office wall has a schedule crammed with product launches and suggests that apps for Yahoo Groups and Messenger are in the works. “We know there is going to be skepticism,” Parry says. “The fact that we are already seeing the payoff is giving everyone faith that we’re on the right path. That’s what Marissa is so great at. She’s shining a light and beating a path to the horizon and saying, ‘This is where we are going.’”

There was no shortage of skepticism when Mayer departed Google, her only professional home, for the dismal scene that was Yahoo last summer. A pay package valued at $36.6 million in salary and stock for 2012 alone, according to company filings, was no doubt convincing, but Mayer insists she was passionate about the opportunity. And though she vows to focus an interview on corporate strategy, she can’t resist describing her momentary panic and disappointment when she thought she didn’t get the CEO job.

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Mayer had pursued the position in total secrecy. She had to say the code words “project cardinal” to a limo driver waiting outside her Palo Alto home, who then drove her to a Silicon Valley law firm for a meeting with Yahoo’s board. The board was supposed to call with its decision by 8 p.m. When the hour arrived, she and her husband, investor Zachary Bogue, were at a dinner party, and Mayer was battling the urge to keep checking her phone. “I saw such an opportunity here,” she says, “and felt like I had so many ideas.” She also felt that after 10-plus years at Google, it was time to leave.

At 9:45 p.m., Mayer’s phone was still silent. She was crestfallen and making frantic hand gestures to Bogue that she wanted to leave the party. (Bogue, enjoying his seat next to former San Francisco 49ers quarterback Joe Montana, wanted to stay.) Finally, as they were saying their goodbyes, Mayer got a call from Jim Citrin, a partner at Yahoo’s executive recruitment firm, Spencer Stuart. Propriety demanded she let it go to voice mail. A year later in the Yahoo cafeteria, she taps her iPhone screen and plays it: “Marissa … you should be smiling,” Citrin is saying. “We’re smiling. Call me ASAP.”

Mayer is relentless in her search for other believers. In addition to her mobile hiring spree, she’s begun shifting funds back into Yahoo’s research organization, which previous CEO Thompson gutted in a round of layoffs. She says the lab has a goal of hiring 50 Ph.D.s this year and has already signed up 30.

Continued to Part IV

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