Monday, February 04, 2008

Yahoo is Saying “Boo Hoo”!

The internet giant Yahoo has been falling farther and farther behind its competitor (Google) for years. They’ve tried lots of different things to bring in more traffic and more ad money, mostly adding new content to their already-cluttered main page. But it has consistently proven to be ineffective against their rival.

The gap between them keeps getting wider and wider. Google keeps getting stronger and stronger, and Yahoo weaker. Recently, Yahoo announced about a thousand layoffs, as their stock prices continue into decline.

Then, all of a sudden, Microsoft springs to the rescue, offering to buy out Yahoo for about 44 and a half billion dollars. Yes. You read that right. That’s a 44 followed by 9 zeros. Just to put that into perspective, the current population of the world is only the total estimated population of the earth, as of Jan of ’08, is about 6.5 billion. If that deal goes through, that means that Yahoo, as a company, would be worth about $6.85 for every man, woman, and child on the face of the earth today.

…And yet, somehow, it’s failing?

True story. It might be worth billions, but It’s also spending a lot as well. It’s also losing market share.

Yahoo started out in 1994 as a bit of a lark by a couple of Stanford grad students. While working on their dissertations, they also began a compilation of some of their favorite websites. In the beginning it was called, “Jerry's Guide to the World Wide Web”. Soon it grew and required more organization, and so the sites were listed in categories and subcategories, directory-style.

By April of that same year, they renamed it “Yahoo”, and by the following year, they incorporated, and started growing. For many years, they led the internet search industry.

In the late ‘90’s, they diversified and became a web portal. This means that they provided direct access to lots of different content and online programs. News stories, email, stock information, web hosts, all sorts of things became accessible directly from Yahoo’s main page.

Google, on the other hand, started a bit later, in 1996, also by Standford grad students. In this case, they had a tighter focus. They designed a way to search the growing ‘net and rank the results more effectively.

Even though Google has done some branching into other areas, such as email services and world mapping, they’ve stuck mostly to their primary focus, providing good search results, and tagging relevant ads to them. This model has not only kept them solvent, it’s helped them to grow far beyond any competition. The word “to Google” is in the dictionary, now, meaning “to search the internet for information.”

The takeover of Yahoo by Microsoft is an interesting one. Microsoft is definitely the big man on the block when it comes to software and computing in general. But in the search world, they’ve not been able to make much of a dent. Consider: In Jan, 2008, Google’s market share is about 77%. A not-even-close second is Yahoo, at a little over 12%. A not-even-close-to-Yahoo third is Microsoft, whose two entries in the race (MSN and Microsoft Live Search) combine to about 6%.

So, how is it that a company that is stumbling and tripping in the race to be the best search engine will somehow get stronger if bought by the company that can’t seem to run even that fast?

What does all this mean to you, the small business person? A lot. Let me clarify that: A whopping lot!

Clearly, getting better and better rankings at Google are very important, even critical. But if Yahoo dies, then Google becomes the only game in town. If Yahoo and Microsoft team up to take them on, that might preserve the competitive nature of the search world, but will they really be able to take the lead? Will a Yahoo ranking really make a difference to your business?

Keep watching!

Mark is the co-director of, the search marketing consulting arm of Clickincome ( Mark also has other sites and blogs, including and his MoBoy blog.

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