Yahoo looks to raise its game in the UK

Central to Jerry Yang and co's plans, outlined in a 35-page document,
were aims to "serve advertisers' needs so well that they can't imagine
not working with Yahoo" and to become the starting point for most users
on the internet through its homepage, MyYahoo, plus Yahoo Mail, search
and mobile.

Yahoo made clear its view that opportunities for display advertising are
larger than search, claiming that it is in a strategic position to lead
on this front. It is targeting $1.9bn (£950m) in added
revenue over the next three years from display/video advertising, adding
that its growth would outpace the currently anticipated market rate of
growth.

Globally, search marketing is dominated by two players who hold more
than 90% of the market. Yahoo points out that in display advertising,
the top 10 websites have less than 25% of the market, and therein lies a
golden opportunity.

It also plans to develop a new ad platform designed to simplify online
advertising buying and selling, as well as improving the Panama search
advertising platform.

Key priority

To be dominant in display, Yahoo intends to make launching online ad
campaigns "fast and easy" - within minutes to hours, rather than the
"inconsistent and slow" current experience, where booking campaigns
takes days or weeks.

Ally this with Yahoo European boss Toby Coppel's "key priority" to build
a display ad network in Europe, and Yahoo is talking of the sort of
market domination that investors like to hear. But will it persuade them
to resist Bill Gates' advances?

When Coppel set out his aims in Media Week last September, Yahoo had
just bought ad network BlueLithium and signed a deal with Bebo to sell
display ads across the social networking site. Since then, AOL has
bought Bebo, and Google's purchase of DoubleClick has been approved by
regulators, providing further evidence that there is more than one
internet giant with display advertising at front of mind.

Jo Lyall, head of digital at MindShare Interaction, says that Yahoo
potentially losing the Bebo contract is a big blow. "If you want to be
the number one online buying point, you have to have all the options and
Bebo was its social network sell. It doesn't have anything to offer in
its place at the moment," she says.

Yahoo has started merging its display and search teams - a move welcomed
by Rob Horler, managing director of Diffiniti.

Horler says: "Much more emphasis is going to be put on how online and
offline display is working in tandem with search. So, from a
media-buying point of view, the strategy is absolutely right. The
problem is that it's devilishly difficult to deliver."

With Google entering the display fray with its £1.5bn DoubleClick
buy, Horler believes Yahoo must accelerate its plans for display
advertising.

"Google realises that it has to crack display this year if it wants to
continue the momentum of its business. Google will start to make
progress this year and eat into Yahoo and Microsoft's lead in display,"
he adds.

The prediction that Google will become big in display means that
industry figures are not so concerned about a Microsoft-Yahoo merger
leading to a monolith in display. Opinion centres rather on how a
combined Microsoft-Yahoo search engine would be a welcome rival to
Google's search dominance.

Viable competitor

Nigel Gwilliam, head of digital at the Institute of Practioners in
Advertising, says: "The Microsoft bid for Yahoo is about creating a
viable competitor to Google. On this basis, we don't have a problem with
the proposed takeover. There has been some talk of Yahoo seeking to see
off the bid by outsourcing its search to Google - we would most
definitely have a problem with this."

But, whether part of Gates' empire or not, Yahoo's plans remain relevant
- if not achievable, according to Mark Tomblin, head of strategy at
digital agency TBG London.

Tomblin says Yahoo's presentation "contains a wish list of what it would
like to be, rather than what it will be". He adds: "Spraying words such
as strategic and opportunity around on charts doesn't mean it has a
strategy. I don't see a lot of evidence that it will be able to achieve
its objectives."

MindShare Interaction's Lyall says Yahoo should concentrate on other
priorities. "Yahoo has more pressing issues to deal with in the UK, such
as recruitment challenges, and that it is not getting its messages
across," she says. "There are two things agencies want to know: what's
happening this year, and what our long-term future relationship is going
to look like."

The US is where the big decisions are made and Yahoo UK and Ireland
declined to comment for this article. But the feeling in the industry is
that Yahoo has to up its game in the UK and improve its dialogue with
agencies, if it is to get close to realising the ambitions that have
been laid out on the other side of the Atlantic.

YAHOO: HIGHS AND LOWS

What Yahoo has to boast about ...

- Second-most popular homepage in the world after Google

- Most popular personalised homepage

- Most used e-mail service globally, slightly ahead of MSN

- Number one portal on news, finance and sports

- Second-highest global query share for its search engine after
Google

- Yahoo Answers, leading social search engine

And what it needs to improve on ...

- Replacing high-profile figures such as Blake Chandlee and Richard
Firminger

- Online sales team ranked 10th out of top 20 UK online media owners by
IPA

- Search sales team ranked below MSN, Google and Miva in IPA UK
survey

- Only a 7% share of UK searches, compared to Google's 79%

- Unique UK audience in February 2008 down 5% year on year.