Yahoo made over $5 billion in revenues for 2016. Those primarily consisted of search and display (both served on Yahoo Properties and Affiliate Sites. In 2017 Yahoo got purchased by Verizon for $4.5 billion. Yahoo is now (together with AOL) part of a new Verizon Business Unit, called Oath, which aim at competing against Google and Facebook.
Business Model Element
Analysis
Implications
Examples
Value Proposition
Yahoo’s value proposition has evolved over time and includes: – Web Portal: Offering a web portal with a variety of content and services. – Email: Providing email services through Yahoo Mail. – Search: Delivering search engine functionality. – News and Content: Aggregating news and content from various sources. – Advertising: Offering advertising opportunities to businesses. Yahoo aims to provide users with a comprehensive online experience, including content, communication, search, and advertising services.
Offers a one-stop destination for various online needs, including email, news, and search. Attracts users seeking a web portal, email services, and content. Provides businesses with advertising opportunities to reach a wide audience. Yahoo’s value proposition has evolved to meet changing user preferences and industry trends.
– Yahoo Mail for email services. – Yahoo News for aggregating news content. – Yahoo Search for search engine functionality. – Providing advertising opportunities to businesses.
Customer Segments
Yahoo serves a range of customer segments, including: 1. Internet Users: Individuals using Yahoo’s web portal, email, and search services. 2. Advertisers: Businesses and marketers seeking online advertising opportunities. 3. Content Providers: Publishers and content creators partnering with Yahoo. Yahoo’s diverse customer base includes internet users, advertisers, and content providers, connecting them through its online platform.
Offers internet users a variety of online services and content. Provides advertisers with a platform to reach a broad audience. Collaborates with content providers to showcase their offerings. Connects internet users, advertisers, and content providers on its platform.
– Internet users using Yahoo’s web portal, email, and search. – Advertisers looking for online advertising opportunities. – Content providers partnering with Yahoo.
Distribution Strategy
Yahoo’s distribution strategy includes: – Online Platform: Operating a web portal as the primary distribution channel. – Mobile Apps: Offering mobile applications for access on smartphones and tablets. – Partnerships: Collaborating with other internet companies and service providers. – Syndication: Distributing Yahoo’s content and services to partner websites. Yahoo leverages its online platform, mobile apps, partnerships, and syndication to reach users and provide services.
Offers an easily accessible online platform for internet users. Provides mobile apps for on-the-go access. Collaborates with partners and syndicates content to extend reach. Utilizes partnerships to expand the distribution of Yahoo’s services and content.
– Operating a web portal as the primary distribution channel. – Offering mobile applications for smartphones and tablets. – Collaborating with other internet companies and service providers. – Syndicating content and services to partner websites.
Revenue Streams
Yahoo generates revenue through various streams: 1. Advertising: Earns revenue from online advertising, including display and search ads. 2. Affiliate Marketing: Receives fees for referring users to partner websites. 3. Premium Services: Offers premium email and content services for a fee. 4. Licensing: Licenses its technology and content to third parties. Yahoo diversifies income through advertising, affiliate marketing, premium services, and licensing agreements.
Earns revenue through various forms of online advertising. Receives fees for driving traffic to partner websites. Offers premium services for a subscription fee. Generates income by licensing technology and content. Diversifies revenue sources to maintain financial stability.
– Generating revenue from online advertising, including display and search ads. – Receiving fees for affiliate marketing and referrals. – Offering premium email and content services for a subscription fee. – Licensing technology and content to third parties. – Diversifying revenue sources for financial stability.
Marketing Strategy
Yahoo’s marketing strategy involves: – Content Aggregation: Aggregating news and content to attract users. – Search Engine: Promoting its search engine capabilities. – Partnerships: Collaborating with other online platforms and content providers. – Mobile Apps: Marketing mobile applications for user convenience. Yahoo focuses on content aggregation, search promotion, partnerships, and mobile apps to attract and engage users.
Attracts users with a variety of news and content. Promotes search engine functionality for user queries. Collaborates with partners and syndicates content. Encourages mobile app usage for on-the-go access. Yahoo’s marketing efforts aim to enhance user engagement and platform usage.
– Aggregating news and content to attract users. – Promoting its search engine capabilities. – Collaborating with other online platforms and content providers. – Marketing mobile applications for user convenience.
Organization Structure
Yahoo’s organizational structure includes: – CEO and Leadership Team: Led by the CEO responsible for strategic direction. – Business Divisions: Organized into divisions such as Media, Search, and Communications. – Global Workforce: Employs a global team to manage operations worldwide. – Board of Directors: Comprised of key individuals with expertise in various fields. Yahoo’s structure supports different business divisions, global operations, and strategic direction under the leadership of the CEO.
Led by a CEO who oversees strategic direction and decision-making. Organized into divisions for different aspects of online services. Employs a global workforce to manage operations worldwide. Governed by a board of directors with expertise in various fields. Maintains a structure that supports diverse operations and global expansion.
– Led by a CEO responsible for strategic direction. – Organized into various business divisions, such as Media and Search. – Employing a global workforce for worldwide operations. – Governed by a board of directors with expertise. – Supporting diverse operations and global expansion.
Competitive Advantage
Yahoo’s competitive advantage stems from: – Web Portal and Content: Offering a wide range of content and services. – Yahoo Mail: A large user base using Yahoo Mail services. – Search Engine: Providing search capabilities. – Advertising Platform: Opportunities for businesses to reach a broad audience. – Established Brand: A recognized and trusted name in the online industry. Yahoo’s content, email services, search, advertising platform, and brand recognition contribute to its competitive position in the online space.
Attracts users with a variety of online content and services. Maintains a large user base through Yahoo Mail. Provides advertising opportunities to businesses. Offers trusted and recognized online services. Leverages an established brand for user trust and engagement.
– Offering a wide range of online content and services. – Maintaining a large user base through Yahoo Mail. – Providing advertising opportunities to businesses. – Being a trusted and recognized online service provider. – Leveraging an established brand for user trust.
Yahoo makes most of its revenues from search and display ads. The remaining part comprises listings-based services revenue, transaction revenue, royalties, patent licenses, and fees revenue.
Yahoo Search Revenue
When users on Yahoo search pages from mobile or desktop click on text-based links to advertisers’ websites, this is when revenue is generated. Indeed, this is a paid click. Those paid clicks can be performed on both Yahoo Properties and Yahoo Affiliate sites.
Yahoo recognizes revenues from search advertising on Yahoo Properties and Affiliate sites based on Paid Clicks defined as when “an end-user clicks on a sponsored listing on Yahoo Properties or Affiliate sites for which an advertiser pays on a per click basis.”
Display Revenue
Display revenue is recorded when graphical,non-graphical,and video advertisements (“display advertising”) is shown on both Yahoo Properties and Affiliate Sites. Revenue is recorded based on specified criteria such as the number of impressions during a fixed period targeted to a specific audience or in a particular placement.
Also, Yahoo earns revenue fromnon-guaranteeddisplay advertising, which includes native advertising.
Therefore revenues are recognized both as impressions or clicks on display advertisements, including native advertising. An Impression is defined as an advertisement appearing in pages viewed by users. Clicks are delivered when a user clicks on an ad.
Listings-based services also include classified advertising, such as Yahoo Local, which revenue gets recognized when services are performed. Those services include transactions generated on Yahoo Properties, such as Yahoo Small Business, Yahoo Travel, and Yahoo Shopping.
Microsoft Search Agreement Explained
To understand Yahoo monetization strategy, it is critical to understand its agreement with Microsoft over the years.
The search agreement between Microsoft and Yahoo determined the percentage of revenues generated from Microsoft’s services on Yahoo Properties and Affiliate sites to Yahoo. Revenue Share Rate was 88% for the first five years of the Microsoft Search Agreement. It increased to 90% on February 23, 2015.
After a change to the search agreement (called Eleventh Amendment), the Revenue Share Rate increased to 93%.
As specified on Yahoo annual report for 2016:
The term of the Microsoft Search Agreement is 10 years from its commencement date, February 23, 2010, subject to earlier termination as provided in the Microsoft Search Agreement. As of October 1, 2015, either the Company or Microsoft may terminate the Microsoft Search Agreement by delivering a written notice of termination to the other party. The Microsoft Search Agreement will remain in effect for four months from the date of the termination notice to provide for a transition period; however, the Company’s Volume Commitment will not apply in the third and fourth months of this transition period.
Approximately 37% of the Company’s revenue for 2016 was attributable to the Microsoft Search Agreement.
Yahoo Traffic Acquisition Costs
The traffic acquisition cost is a critical metric to assess the success of a business model based on traffic. That applies to websites in general, yet that is even more important for search engines. It is therefore important to keep monitoring it to make sure the business is profitable in the long run.
As any digital business, Baidu needs a continuous stream of traffic to monetize its pages. In 2017 Baidu managed to lower its Traffic Acquisition Costs as a percentage of its revenues at 11.4%. Primarily driven from its Baidu Union Members, and its iQIYI services. The former allows Baidu to have inexpensive content served by third-parties members. The latter will enable Baidu to have high-quality premium content at a low cost.Over the years Google has been able to reduce its traffic acquisition costs and in any case to keep it stable. In 2017 Google spent 22.7% of its total advertising revenues (over $21 billion) to guarantee its traffic on several desktop and mobile devices across the web.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
